Fed Gov. Waller wants 'several months' of good inflation data before lowering rates

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Fed Gov. Christopher Waller said Tuesday that he does not think further interest rate increases will be necessary. However, cuts are probably “several months” away, the central bank official said during a speech in Washington. Christopher Waller, governor of the US Federal Reserve, during a Fed Listens event in Washington, D.C., on Friday, Sept. 23, 2022. Al Drago | Bloomberg | Getty Images

Federal Reserve Gov. Christopher Waller, citing a string of data showing that inflation appears to be easing, said Tuesday that he does not think further interest rate increases will be necessary.

However, the policymaker added he will need some convincing before he backs cuts anytime soon.

“Central bankers should never say never, but the data suggests that inflation isn’t accelerating, and I believe that further increases in the policy rate are probably unnecessary,” said Waller, who has been generally hawkish in his recent views, meaning he supports tighter monetary policy.

The comments came in prepared remarks for an appearance before the Peterson Institute for International Economics in Washington.

Waller pointed to a string of recent data, from flattening retail sales to cooling in both the manufacturing and services sectors, to suggest the Fed’s higher rates have helped ease some of the demand that had contributed to the highest inflation rates in more than 40 years.

Though payroll gains have been solid, internal metrics such as the rate at which workers are leaving their jobs show that the ultra-tight labor market that had driven up wages last a level consistent with the Fed’s 2% inflation goal has displayed signs of loosening, he added.

Yet Waller said he’s not ready to back interest rate cuts. As a governor, Waller is a permanent voting member of the rate-setting Federal Open Market Committee.

“The economy now seems to be evolving closer to what the Committee expected,” he said. “Nevertheless, in the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy.”

April’s consumer price index showed inflation running at a 3.4% rate from a year ago, down slightly from March, with the 0.3% monthly increase slightly below what Wall Street economists had been expecting.

The Labor Department report was “a welcome relief,” Waller

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