Waller Open to Holding Rates Steady, But Warns Hike Is Possible
By CU Today Staff —
WASHINGTON—Federal Reserve Gov. Christopher Waller said Thursday he would support holding interest rates steady this month if upcoming data show inflation continues to ease, but warned that an unexpectedly hot reading could prompt him to back a rate increase.
“If there is continued progress toward our 2% goal, then I am willing to support holding the policy rate at its current level,” Waller said in remarks delivered Sept. 3 at the Reuters NEXT Newsmaker Interview in Washington. “But if inflation comes in hot, I would consider a rate hike.”
Waller said economic growth and the labor market remain solid, while recent inflation data have shown encouraging improvement. Three-month core inflation declined from 4.76% in February to 3.05% through July, although that pace remains above the Federal Open Market Committee’s 2% target. Waller expects real gross domestic product to grow slightly more than 2% this year.
The Fed will receive another employment report and inflation reading before its Sept. 15-16 meeting.
“I judge that policy is currently only slightly restricting aggregate demand, and it may not take much acceleration in inflation to nudge me into supporting tighter policy,” Waller said. “If there is evidence that progress toward 2% inflation reversed in August, a small adjustment in our stance would help ensure that it resumes.”
Originally reported by CU Today.