Fed Official Supports ‘Another Significant Increase’ In Interest Rates This Month
‘I support another significant increase in the policy rate,’ says Christopher Waller, ‘to get the policy rate to a setting that is clearly restricting demand.’
Photo:
Patrick Semansky/Associated Press
Federal Reserve governor
Christopher Waller
appeared to support raising rates by another 0.75-percentage point later this month to combat inflation, the latest official to firm up expectations of a third consecutive increase of that size.
Officials have been debating whether to raise rates by 0.5 point and 0.75 point at their coming Sept. 20-21 policy meeting, but they haven’t pushed back against market expectations of the bigger move.
In a speech Friday, Mr. Waller didn’t specifically say whether he would back a 0.5-point or 0.75-point rate increase, but his remarks strongly suggested he favored the larger one.
“Looking ahead to our next meeting, I support another significant increase in the policy rate,” Mr. Waller said during remarks at a conference in Austria. Such an increase is necessary “to get the policy rate to a setting that is clearly restricting demand.”
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Mr. Waller’s remarks explained why a slowdown in August inflation wouldn’t meaningfully change his near-term outlook. The Labor Department is set to release the consumer-price index for August next week.
He pointed to how a short-term deceleration in inflationary pressures last year, including for so-called core prices that exclude food and energy items, led the central bank to delay plans to withdraw stimulus. Inflation subsequently accelerated.
“The consequences of being fooled by a temporary softening in inflation could be even greater now if another misjudgment damages the Fed’s credibility,” said Mr. Waller. “So until I see a meaningful and persistent moderation of the rise in core prices, I will support taking significant further steps to tighten monetary policy.”
Write to Nick Timiraos at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
‘I support another significant increase in the policy rate,’ says Christopher Waller, ‘to get the policy rate to a setting that is clearly restricting demand.’
Photo:
Patrick Semansky/Associated Press
Federal Reserve governor
Christopher Waller
appeared to support raising rates by another 0.75-percentage point later this month to combat inflation, the latest official to firm up expectations of a third consecutive increase of that size.
Officials have been debating whether to raise rates by 0.5 point and 0.75 point at their coming Sept. 20-21 policy meeting, but they haven’t pushed back against market expectations of the bigger move.
In a speech Friday, Mr. Waller didn’t specifically say whether he would back a 0.5-point or 0.75-point rate increase, but his remarks strongly suggested he favored the larger one.
“Looking ahead to our next meeting, I support another significant increase in the policy rate,” Mr. Waller said during remarks at a conference in Austria. Such an increase is necessary “to get the policy rate to a setting that is clearly restricting demand.”
SHARE YOUR THOUGHTS
What questions do you have about the current economic outlook? Join the conversation below.
Mr. Waller’s remarks explained why a slowdown in August inflation wouldn’t meaningfully change his near-term outlook. The Labor Department is set to release the consumer-price index for August next week.
He pointed to how a short-term deceleration in inflationary pressures last year, including for so-called core prices that exclude food and energy items, led the central bank to delay plans to withdraw stimulus. Inflation subsequently accelerated.
“The consequences of being fooled by a temporary softening in inflation could be even greater now if another misjudgment damages the Fed’s credibility,” said Mr. Waller. “So until I see a meaningful and persistent moderation of the rise in core prices, I will support taking significant further steps to tighten monetary policy.”
Write to Nick Timiraos at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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