Zhitong Finance learned that as one of the most watched hawks**, Federal Reserve Governor Waller said on Thursday that he needs to see more evidence that inflation is cooling before he is willing to support interest rate cuts.
In a policy speech delivered in Minneapolis, the ** ended the speech on the issue of interest rate cuts with the question, "What's the hurry?" He said January's higher-than-expected inflation data raised questions about where prices are going and how the Fed should respond.
"Last week's high reading of CPI inflation may have been just a bump in the road, but it could also be a warning that significant progress on inflation over the past year may be stalling," Waller said in a prepared speech. ”
While he said he still expects the FOMC to start cutting rates sometime this year, he believes the expectation that inflation will fall to the Fed's 2% target is "mostly an upside risk."
He added that based on an annualized GDP and employment growth rate of 3With a strong performance of 3%, there is little sign that inflation will fall below 2% anytime soon, and there is little sign of a potential recession. As a trustee, Waller is a permanent voting member of the FOMC.
This makes the decision to be patient when starting to ease policy easier than you think," Waller said, "and I need to look at inflation data for at least a few more months to tell if January's data is a speed bump or a pothole." ”
The above remarks are in line with the Fed's general view that the timing and pace of rate cuts remain uncertain, although further rate hikes are unlikely.
Waller's inflation data showed that the Consumer Index (CPI) was 03%, compared with the same period last year**31%, both higher than expected. Excluding food and energy, core CPI grew 39%, an increase of 04%。
Waller believes that the Fed's preferred inflation measure, core personal consumption expenditures** (PCE), is likely to reflect a 12-month 2 when it is released later this month8% increase.
He said such a high reading made the case for waiting even stronger, noting that he would be looking at data such as consumer spending, employment, wages and salaries for further clues on inflation. This comes after retail sales unexpectedly fell by 08%, while employment jumped 35 percent for the month30,000 people, much higher than expected.
I still expect it would be appropriate to start easing monetary policy sometime this year, but the onset of policy easing and the number of rate cuts will depend on the data coming up," Waller said, "and as a result, I believe the committee can wait a little longer to ease monetary policy." ”
According to the data, just a few weeks ago, the market also priced in a high probability of a rate cut by the Fed at its next meeting on March 19-20. However, expectations have been pushed back to the June meeting, and the probability that the FOMC may wait until July to cut rates has even risen to about a third.
Earlier, Fed Vice Chairman Jefferson did not say anything about the pace of rate cuts, saying only that he expected them to cut rates "later this year", but did not provide a timetable.
Fed Governor Cook also spoke and noted the progress the Fed has made in its efforts to bring down inflation without dragging down the economy.
However, while she also expects a rate cut this year, she "hopes to have more confidence" that inflation will return to 2% on a sustainable path before cutting rates.
In addition, Waller also pointed out in his speech that the ** of commercial property values is a "serious problem" and that "someone" will have to bear the loss, but this will be a gradual process and will not cause a crisis.
We still have time," Waller said, "and everything I've seen is manageable, manageable, and the banks are already preparing for losses." "Therefore, this should not lead to any serious recession or financial crisis.