Fed's Waller: Latest inflation data was a disappointment
14.10.2024, 19:26

Fed's Waller: Latest inflation data was a disappointment

Federal Reserve (Fed) Board of Governors member Christopher Waller noted on Monday that recent US inflation data was a "disappointment", threading the needle between dangling an increase in the pace of Fed rate cuts in the future while also expressing caution at the current pace.

Key highlights

I am less certain on destination than policy direction.

My baseline calls for reducing policy rate gradually over the next year.

The Fed should proceed with more caution on rate cuts than was needed at September meeting.

I see pent-up demand for big-ticket items, consumers eager to make purchases as rates come down.

Household resources for future consumption in good shape.

The economy on solid footing, may not be slowing as much as desired; expect GDP to grow faster in 2H 2024.

The latest inflation data disappointing.

If inflation unexpectedly rises, fed could pause rate cuts.

If, in a less likely case, inflation falls below 2% or labor market deteriorates, fed can front-load rate cuts.

If the economy proceeds as expected, can move policy to a neutral stance at a deliberate pace.

Policy rate is currently restrictive.

Looking ahead, I expect payroll gains to moderate, unemployment rate to drift higher but stay historically low.

The labor market is quite healthy, labor supply and demand have come into balance.

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