Federal Reserve Governor Christopher Waller said on 27 March 2024 that there was no rush to cut US interest rates, arguing that recent inflation data justified keeping policy restrictive for longer than previously expected.
In a speech titled “There's Still No Rush” at the Economic Club of New York, Waller said the data received so far in 2024 had made him uncertain about the speed of continued progress on inflation. “Adding this new data to what we saw earlier in the year reinforces my view that there is no rush to cut the policy rate,” he said. “Indeed, it tells me that it is prudent to hold this rate at its current restrictive stance perhaps for longer than previously thought to help keep inflation on a sustainable trajectory toward 2 percent.”
Waller said he continued to believe that further progress would make it appropriate for the Federal Open Market Committee to begin reducing the target range for the federal funds rate in 2024. “But until that progress materializes, I am not ready to take that step,” he said.
INFLATION AND JOBS DATA
Waller noted that core personal consumption expenditures (PCE) inflation rose 0.4% on a monthly basis in January, after averaging around 0.1% from October to December 2023, and that both headline and core consumer price inflation rounded to 0.4% in February. Employers added 275,000 jobs in February, taking the three-month average to 265,000, while the unemployment rate rose to 3.9%.
He said the strength of the US economy and the resilience of the labour market meant the risk of waiting a little longer to ease policy was small, and significantly lower than the risk of acting too soon and possibly squandering progress on inflation. He cited the Atlanta Fed's GDPNow model, which predicted first-quarter real GDP growth of 2.1% at an annual rate.