Federal Reserve Governor Christopher Waller said Wednesday that he stands ready to lower the level of interest rate hikes soon as long as economic data remain supportive.
The rate-setting Federal Open Market Committee is scheduled to meet on December 13-14. Market expectations are rising that the policymaker will approve another rate hike, but this time he is opting for a 0.5 percentage point or 50 basis point hike. That was after four consecutive 0.75% gains were approved.
In remarks prepared for the event in Phoenix, Waller said, “Heading into the FOMC’s December meeting, the data over the past few weeks makes it more likely that we will consider a 50 basis point rate hike. “But we won’t make a judgment on that until we see more data, such as the next PCE inflation report or the next employment report.” Basis points equal 0.01 percentage points.
Christopher Waller testifies before the Senate Committee on Banking, Housing and Urban Affairs at a hearing regarding his nomination to the Federal Reserve Board of Governors in Washington, DC, on February 13, 2020. .
Sarah Silbiger | Getty Images
The next PCE inflation report is scheduled for December 1st.
Investors were optimistic that October’s weaker-than-expected CPI inflation signaled lower inflation. The headline CPI rose 0.4% and 7.7% year-on-year in a month, while core figures excluding food and energy rose 0.3% and 6.3%, respectively. All measurements were lower than market estimates.
The Federal Reserve has backed its core consumer spending measure, which rose 0.5% in September and 5.1% from a year ago, as a measure of inflation.
Waller said he will be watching the data closely as he suspects the October CPI has confirmed a new trend. As governor, he is his FOMC automatic voter.
“Although this is welcome news, we must be careful not to read too much into one inflation report. “It cannot be overemphasized that one report does not show a trend.
Waller said he looks at three key data points when making an assessment, apart from broader inflation indicators: core commodity prices, housing and non-housing services. He said there were encouraging signs on all three fronts, but he needed to look further and vowed not to “fake a head on one report.”
“Like many others, I hope this [CPI] The report marks the beginning of a meaningful and lasting decline in inflation. But policy makers cannot act on hope,” he said.
Earlier in the day, San Francisco Fed President Mary Daly told CNBC that she expected another rate hike of at least 1 percentage point in the future. Currently, the Fed’s benchmark interest rate is within his target range of between 3.75% and 4%.
