Fed’s Waller ‘leaning toward’ a rate cut, but worries about inflation | Global News Avenue

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

“Based on the economic data available today and forecasts showing that inflation will continue to fall to 2% over the medium term, I am currently inclined to support a reduction in the policy rate at the December meeting,” Waller said at the December meeting. Monetary Policy in Washington Speeches delivered at the forum.

However, he noted that “that decision will depend on whether the data we receive before then surprises higher and changes my forecast for the path of inflation.”

Waller cited recent data to suggest progress on inflation may be “stagnant.”

In October, the Fed’s preferred inflation measure personal consumption expenditures price indexshowed headline inflation rising to 2.3% annually, while core prices, which exclude food and energy costs, rose to 2.8%. The Fed’s target interest rate is 2%.

While the data was in line with Wall Street expectations, it was an increase from the previous month and evidence that despite progress, the central bank’s goals remain elusive.

“Overall, I feel like an MMA fighter constantly choking the bloat and waiting for it to go away, but it always slips out of my grasp at the last moment,” Waller said. Said during mixed martial arts. “But I assure you, capitulation is inevitable – inflation is not going out of the octagon.”

The market expects the Fed to cut its benchmark overnight borrowing rate by another 25 percentage points when it meets on December 17-18. This follows reductions of half a percentage point in September and a quarter of a percentage point in November.

“As of today, my preference is to continue the work we have started and return monetary policy to a more neutral environment,” Waller said.

Waller said he would pay close attention to upcoming employment and inflation data. The U.S. Bureau of Labor Statistics will release job openings and nonfarm payrolls reports this week, with the latter coming after just 12,000 new jobs were added in October, largely due to labor strikes and weather problems.

Waller said that despite the slowdown in inflationary progress, the health of the broader economy made him feel it was appropriate to continue to ease monetary policy.

“After we cut interest rates by 75 basis points, I believe there is strong evidence that policy continues to be significantly constrained, and another rate cut will only mean we are not pressing the brake pedal as hard,” he said.

Also on Monday, New York Fed President John Williams expressed confidence in lower inflation and said he still believed policy could become more “neutral” over time, without providing specifics.