Federal Reserve Governor Waller stated on Wednesday that before making an interest rate decision, the Federal Reserve can wait, observe, and wait, as well as collect more economic data. This indicates that he also supports temporarily maintaining interest rates unchanged in the interest rate resolution two weeks later.
Waller claims that he is weighing recent data to determine whether the Federal Reserve has successfully suppressed demand and slowed inflation, or whether the economy continues to show resilience and further push up prices.
In his speech, Waller emphasized, "As of today, it is still too early to determine whether further policy interest rate action is needed. Therefore, I believe we can wait and observe how the economy develops before taking clear action on the path of policy interest rates
It is worth noting that one day later, Federal Reserve Chairman Powell will also deliver a policy speech, which the market expects to have a "one shot" effect.
In recent days, a number of Fed officials said that the rise in the yield of US treasury bond bonds indicates that the financial environment is tightening, and there may be no need to raise interest rates further. As they said, the yield of US bonds is still rising. On Wednesday, the yield of US 10-year treasury bond bonds rose to 4.889%, the highest level since 2007.
In response, Waller stated that behind the rebound in US bond yields, there has indeed been significant progress in inflation, but there are also some reasons for concern that the progress may not be sustainable.
He pointed out that widely watched indicators such as the Consumer Price Index (CPI) and the Personal Consumer Expenditure Price Index (PCE) favored by the Federal Reserve show core inflation rates of 3.1% and 2% for the three months, respectively.
However, overall, Federal Reserve officials remain cautious about inflation issues. Few Federal Reserve officials believe that interest rates will be cut soon in the future, but many people tend to believe that the current rate hike cycle may have ended.
Waller has always been one of the more hawkish Federal Reserve officials, and as a Fed governor, he automatically has voting power in the Federal Open Market Committee (FOMC) that sets interest rates. His statement expressed support for a short-term suspension, but made no commitment to subsequent policies.
He said that if the growth rate of the real economy slows down, policy interest rates can be maintained stable; But if the economy continues to strengthen and inflation shows a stabilizing or re accelerating trend, higher interest rates may be needed.
Waller added that he does not want to discuss rate cuts before stopping them. No one expects a rate cut in the near future, and we may still raise rates again. Whether and when to raise rates will be entirely data-driven.
Earlier, Philadelphia Fed Chairman Huck also stated that the Fed should extend the pause in rate hikes to determine whether the rapid rate hikes of the past 20 months have been sufficient to curb inflation.