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| Federal Reserve Governor Christopher Waller said at the central bank meeting on February 1 that he would support a slowdown in rate hikes. Erin Schaff |
Federal Reserve Governor Christopher Waller added his voice to the chorus of central bank officials supporting a slowdown in rate hikes at Friday's Feb. 1 central bank meeting. This will most likely anchor market expectations of a return to smaller policy adjustments after a series of jumbo rate moves.
Waller spoke out on the eve of the quiet period before the central bank meeting. This means that investors can only hear the Federal Reserve's comments after making an interest rate decision. His comments were in line with what many of his colleagues had said. No
The central bank said it would raise interest rates significantly in 2022, and in December it slowed interest rate increases to 0.5 percentage points. But they are entering a new phase that focuses on how high interest rates rise, not how fast they rise. Interest rates are now high enough to slow the economy significantly, and a more gradual adjustment in interest rates will give policymakers time to see how policy is working. can. Is possible.
This has pushed policy makers towards the quarter point, aka 25 basis points, that was common before the pandemic.
Waller said of the December recession, "We raised interest rates rapidly and used monetary policy to raise interest rates significantly across the economy and keep inflation under control, but we can't stop it." Paddy field. At the next meeting of the Federal Reserve (Fed), he plans to raise interest rates by 25 basis points, as there appears to be little disruption. ”
But Waller stressed the need to raise interest rates to curb inflation.
Federal Reserve Bank of New York Governor John C. Williams said Thursday that the central bank has more to do to slow the economy.
Williams welcomed the recent slowdown in inflation and said nothing dampened financial market expectations that the Fed might slow rate hikes at its next meeting, but the economy remained in balance. I said. yes. emphasized that no
"Some inflation indicators are encouraging," Williams said, but said the labor market remained strong.
Williams said it would affect the rate hikes needed to keep inflation low enough to bring it down to the Federal Reserve's target.
"Demand still seems very strong compared to available supply," he said. "The concern is that this will continue to put pressure on inflation," he said.
Many of his Fed officials have suggested that rates should be raised above 5%. However, based on market pricing, investors expect policymakers to stop sooner than that. They expect interest rates to rise from the current He 4.25-4.5% range to his peak of 4.75-5%, before falling again by the end of the year.
Fed officials welcomed the slowdown in inflation, but reiterated their commitment to contain inflation and determined the problem was not yet under control.
"We don't want to go crazy," Waller said Friday. “We expect the recent improvement in headline and core inflation to continue,” he said.
Inflation is a global problem, and other top economists and central bankers around the world have warned against inflation, including his discussion at this week's panel at the World Economic Forum in Davos, Switzerland. is emitting. Highlight potential sustainability. express concern. Swiss Central Bank Governor Thomas J. Jordan warned on Friday that returning inflation to standard could be difficult.
“Raising inflation from 4% to 2% will be even more difficult. Many central banks, including the Federal Reserve, are targeting 2% annual inflation,” Jordan said. I was. I was. paddy field.
Harvard economist and former Treasury Secretary Lawrence H. Summers also said during a discussion on the same panel at Davos that markets are surprisingly single-minded about how interest rates are shaped. rice field. I was.