Christopher Waller, a member of the Federal Reserve Board of Governors and a permanent voter in the Federal Open Market Committee (FOMC), said that monetary policy is close enough to restrict the economy and supports further adjustments at the next monetary policy meeting. Slow rate hike to 1 yard (25 basis points).
Waller said: “I am currently in favor of raising interest rates by a quarter at the next meeting. In addition, we are still a long way from the Fed’s 2% inflation target, and I predict that I will support continued tightening of monetary policy.”
Waller believes that the Fed’s top priority is to maintain the progress made in reducing inflation, and the slowdown in consumer spending will support the gains in this regard. He also expects lower real incomes and higher borrowing costs to help bring inflation back to 2% quickly.
He also said that six months ago when inflation was rising and economic production growth was stagnating, a soft landing was still possible, meaning that progress on inflation was very reasonable without seriously damaging the job market. So far, the Fed has done so, and remains optimistic that this progress will continue.
Meanwhile, Kansas City Federal Reserve Bank President Esther George said a soft landing for the U.S. economy is possible. The day before, Fed Vice Chairman Brainard (Lael Brainard) had hinted at a possible soft landing, and said lower inflation may not lead to massive job losses.
Wall Street Journal reporter Nick Timiraos, who has a “Fed megaphone”, believes that Branard did not directly state his preference for next month’s interest rate hike, but at the same time, he did not extinguish the outside world’s expectations for the next one-yard increase in interest rates.
Foreign media reports pointed out that among Fed officials, Waller had strongly advocated maintaining restrictive policies and demanded that a large number of signs of cooling inflation be seen before unwinding austerity. His comments on Friday underscored his optimism about the Fed’s prospects for a successful soft landing and reining in inflation without causing a recession and hitting the job market hard.
It is worth noting that Waller is the first among the Fed officials who have voting power in FOMC this year to make it clear that the next meeting is expected to raise interest rates by 1 yard. Waller’s remarks on Friday coincided with Philadelphia Federal Reserve Bank Chairman Patrick Harker, who also holds voting power in this year’s FOMC, reaffirming his previous position that a 1-yard rate hike is appropriate in the future.
Harker expects several more rate hikes this year, but the days of 3 yards (75 basis points) of hikes are certainly behind us, and at some point this year, policy rates will be sufficiently restrictive that the Fed will move Interest rates remain in this range, allowing monetary policy to take effect.
He also said the U.S. economy as a whole remains relatively healthy, even with encouraging signs of Fed rate hikes and signs that inflation is cooling.