Federal Reserve Governor Christopher Waller said economic data over the past few weeks have made him “more comfortable” with the idea of moderating the central bank’s pace of interest-rate hikes in December.
Christopher Waller, governor of the U.S. Federal Reserve, speaks during the Center for Financial Stability Event in New York, U.S., on Friday, Nov. 19, 2021. Waller broke with a report from regulators earlier this month and said he disagrees with the idea that stablecoins should only be issued by banks because it would limit payment-system innovation and competition.
In a speech on Wednesday, Waller said his final decision on the size of the appropriate move next month will hinge on the data. He also left the door open to a sequence of half percentage-point increases if needed to curb high inflation.
“The data of the past few weeks have made me more comfortable considering stepping down to a 50-basis-point hike,” Waller said in remarks prepared for an event in Phoenix. “But I won’t be making a judgment about that until I see more data.”
The Fed raised its benchmark interest rate by 75 basis points on Nov. 2 for the fourth straight time, lifting the target range to 3.75% to 4% from near zero in March. Waller, one of the more hawkish Fed officials, said he sees a “stronger” case for using smaller rate increases, such as a 50 basis-point move or a 25 basis-point hike, as rates get higher.
Figuring how high rates will need to go will depend on what happens with economic data, including with inflation and the labor market, he said.
Waller called the recent report showing that consumer prices cooled by more than expected in October a “positive development.” But he said he would not put too much emphasis on any single report and wants to see further evidence that inflation is heading down.
“I expect that getting inflation to fall meaningfully and persistently toward our 2% target will require increases in the federal funds rate into next year,” he said. “We still have a ways to go.”
Looking beyond the Fed’s December meeting, Waller said that the incoming data could warrant a shallow angle of ascent for policy involving a step down to 25 basis-point increases. “Or maybe it could be necessary to continue climbing a little longer to a higher final attitude by implementing a sequence of 50 basis point hikes.”
This article was provided by Bloomberg News.