WASHINGTON, Nov 13 (Portal) – The Federal Reserve may consider slowing the pace of rate hikes at its next meeting, but this should not be seen as “softening” its commitment to lower inflation, Federal Reserve Governor Christopher said Waller on Sunday.
Markets should now be looking at the “endpoint” of rate hikes, not the pace of each move, and that endpoint is likely “a long way off,” Waller said in response to a series of questions about monetary policy at a UBS-organized economics conference in Australia. “That depends on inflation.”
“We’re at a point where we might be able to think about slowing down,” Waller said, but “we’re not softening … Stop paying attention to the pace and start paying attention to where the endpoint is going to be. Until we bring inflation down, that endpoint is a long way off.”
A report released last week showing slower-than-expected inflation in October is “good news” but “just a data point” that other similar readings would need to follow to show convincingly that inflation is slowing, he said.
The 7.7% annualized rise in inflation recorded in October is still “huge,” Waller said, noting that even if the Fed fell from a three-quarter-point rise to a half-point rise at its next meeting, “they’re still going up will. “
“We need to see this type of behavior continue and inflation slowly coming down before we really think about taking our foot off the brake,” Waller said, adding that he’s further convinced the Fed is on the right track Gone, because his rate hikes so far “haven’t broken anything.”
The Fed has hiked rates by a total of 3.75 percentage points since March this year, including four three-quarter-point hikes, a rapid policy shift aimed at cooling the worst inflation spike since the 1980s.
“With all the talk of the economy collapsing and the financial markets collapsing. It didn’t do that,” Waller said.
Analysts and economists have warned that monetary tightening will increase recession risk and hurt employment.
US Senate Banking Committee Chair Sherrod Brown last month urged the Federal Reserve to be cautious about tightening monetary policy enough to put millions of Americans already suffering from high inflation out of their jobs to lose.
Reporting by Howard Schneider; Editing by Aurora Ellis
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