Washington (AP) When the Fed meets in two weeks, a senior Fed member stated Monday that he is inclined to favor a rate cut, but that he may change his mind if there is evidence of ongoing inflation before then.
Christopher Waller, a prominent member of the Fed’s Board of Governors, stated at George Washington University that he is optimistic that inflation is on the decline and that the central bank would probably continue to cut its main rate, which impacts a large number of business and consumer loans.
However, he pointed out that there is a chance that inflation will remain above the Fed’s 2% target, which would lend credence to the case for the Fed’s rate to remain steady this month.
In his remarks at a seminar hosted by the American Institute for Economic Research, Waller stated that he currently leans toward supporting a reduction in the policy rate at our December meeting. However, that choice will be based on whether the data we receive beforehand surprises us with positive results and changes my prediction for the inflation trajectory.
A discernible change in the economic and inflation outlook over the last month or so is reflected in Waller’s concern. The quarter from July to September saw strong growth in both consumer spending and the overall economy. Additionally, despite slowing for the majority of this year, inflation increased in October.
Additionally, the election of Donald Trump has increased the likelihood of huge deportations of migrants and extensive tariffs, both of which could drive up prices. According to some analysts, the Fed may choose to lower interest rates more gradually in order to give itself more time to assess the impact of Trump’s initiatives.
The Fed lowered its benchmark rate by a half-point in September and a quarter-point in November as inflation has been gradually declining since its 2021 peak. In September, it also hinted that it would likely make another quarter-point decrease announcement this month. However, inflation has continued to rise above the Fed’s goal level, casting doubt on the Fed’s future move.
Waller emphasized that he may support keeping rates unchanged this month if further economic data revealed inflation or growth diverging from the Fed’s anticipated forecasts.
“I will support keeping the policy rate constant if the data we receive between today and the next meeting surprises us in a way that suggests our forecasts of slowing inflation and a moderating but still-solid economy are wrong,” he said.
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