Fed’s Waller ‘leaning’ to cut interest rates, but worried about inflation

Federal Reserve President Christopher Waller on Monday said he expects to cut interest rates in December, but is concerned about recent trends in inflation and could change his mind.

“Based on the economic data we received today and our projections that inflation will continue to trend down to 2% over the medium term, we are now leaning toward supporting a rate cut at the December meeting,” Waller said. ” he said. Remarks at the Monetary Policy Forum in Washington.

“The decision will depend on whether the data we receive by then shows unexpected upside and changes my expectations about the path of inflation,” he said.

Waller cited recent data that suggests inflation may be “stagnating”.

In October, the Federal Reserve’s recommended inflation measure, the Personal Consumption Expenditure Price Index, showed headline inflation rising to an annualized rate of 2.3% and core prices, which exclude food and energy costs, rising to 2.8%. Ta. The Fed is targeting interest rates of 2%.

The data was in line with Wall Street expectations but showed an increase from the previous month, proving that despite progress, the central bank remains off target.

“Overall, I feel like an MMA fighter who keeps pumping air in a choke hold, waiting for it to release, but keeps slipping out of my hands at the last moment.” Waller talked about mixed martial arts. “But let me assure you that submission is inevitable. Inflation has not left the octagon.”

Markets expect the Fed to cut the benchmark overnight borrowing rate by another quarter of a percentage point at its Dec. 17-18 meeting. This follows a half-point cut in September and a quarter-point cut in November.

“As of today, we are leaning toward continuing the work we have begun to return monetary policy to a more neutral setting,” Waller said.

Waller said he would closely monitor future employment and inflation statistics. The Bureau of Labor Statistics is scheduled to release a report this week on job openings and nonfarm payrolls, the latter after gains of only 12,000 jobs in October were largely due to worker strikes and weather problems. Ru.

Waller said he felt it was appropriate to continue monetary easing given the health of the broader economy, even though the development of inflation has slowed.

“After the 75 basis point rate cut, I think there’s strong evidence that policy remains significantly restrictive. Another rate cut just means we don’t press the brake pedal as hard,” he said. said.

Also on Monday, New York Fed President John Williams expressed confidence that inflation was trending down, and although he gave no details, he still said policy was likely to be set in a more “neutral” setting over time. He said he was thinking about it.