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Federal Reserve Governor Christopher Waller said Tuesday that a recent round of strong economic data will buy the central bank some time as it decides whether additional interest rate hikes are needed to control inflation.
“The data we got last week was a terrific week, and most importantly, it will allow us to proceed with caution,” Waller told CNBC’s Steve Leazman during a “Squawk Box” interview. “We can just sit there, wait for the data, see if things keep going.”
Highlighting those data points was Friday’s non-farm payrolls report, which showed a better-than-expected increase of 187,000 jobs in August, while average hourly earnings rose just 0.2% for the month, well short of forecasts.
Earlier in the week, other reports showed the Fed’s favorite inflation gauge rose just 0.2% in July, and jobs, a key measure of labor market tightness, fell to their lowest level since March 2021.
Waller said, “The biggest thing is inflation.” “We got two good reports in a row.” The key thing now is “to see whether this low inflation is a trend or was it merely an outlier or a fluke.”
Waller is generally considered one of the more aggressive members of the rate-setting Federal Open Market Committee, meaning he has supported tighter monetary policy and higher interest rates as the central bank battles inflation that could hit its peak by 2022. It was running at its highest rate in summer. over 40 years.
Although he was encouraged by recent reports on where prices are headed, he said they also indicate that the Fed may risk keeping rates high until it is sure that inflation is rising. Has been
When Waller was asked whether the rate hikes could stop, he said, “It depends on the data.” “We will have to wait and see if this inflationary trend continues. We have seen it come down twice before. In 2021, we saw it coming down and then it went up. See, then it all got modified away.”
“So, I want to be very careful to say that we’ve done a kind of job on inflation, until we’re on this trajectory for a few months before I can say we’ve done anything,” he said. have taken.”
Markets are calling it almost certain that the Fed will skip hikes at its September 19-20 meeting. However, there is a 43.5% chance of an increase in Oct-Nov 31. 1 session, tracking futures pricing according to CME Group, indicates some uncertainty. Goldman Sachs said this week that it expects the Fed’s job to be done.
“I don’t think another hike will necessarily put the economy into recession if we feel we need to do that,” Waller said. “It’s not clear that we’re in real danger of hurting the job market too much, even if we raise rates one more time.”
Waller’s comments came less than two weeks after Fed Chairman Jerome Powell said inflation was still too high and more rate hikes may be needed, though he added that policymakers would “think carefully” before moving forward. will proceed”.
Source: www.cnbc.com
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