Federal Reserve Governor Christopher Waller Anticipates Interest Rate Cut in December, But Cautious on Inflation
Federal Reserve Governor Christopher Waller said on Monday that he is leaning towards supporting a cut to the policy rate at the Fed’s December meeting, citing the economy’s current data and forecasted inflation path. However, he expressed concern over recent trends on inflation, which could change his mind.
Waller noted that the Fed’s preferred inflation indicator, the personal consumption expenditures price index, showed headline inflation moving up to 2.3% annually and core prices moving up to 2.8%, which is still above the Fed’s 2% target. He described recent progress on inflation as “stalling” and cited the mixed martial arts phrase “submission is inevitable,” implying that inflation will eventually come under control.
Waller emphasized that his decision will depend on the upcoming data, particularly on inflation and employment, before the December meeting. He highlighted the importance of closely monitoring the labor market and inflation data, including the release of job openings and nonfarm payrolls reports later this week.
Despite Waller’s caution on inflation, he expressed confidence in the broader economic health, stating that it would be appropriate to continue easing monetary policy. He believes that the Fed has already cut interest rates significantly, and further easing would only mean that it is not applying the brakes as strongly.
Markets expect the Fed to cut interest rates by another quarter-percentage point in December, following a half-point cut in September and a quarter-point reduction in November. New York Fed President John Williams also expressed confidence that inflation is heading lower and expects policy to return to a more “neutral” setting over time, although he did not provide specific details.
