Federal Reserve Governor Christopher Waller said he believes inflation will continue to cool towards the United States central bank’s 2% target.
The mentioned assumption is an argument for Mr. Waller in favor of supporting additional interest rates cutting in the current year.
In prepared remarks for an Organization for Economic Cooperation and Development event in Paris, Christopher Waller stated that the degree of further monetary easing by the US financial regulator will depend on data on the dynamic of progress towards achieving an inflation level of 2%. At the same time, he separately noted that, in his opinion, a further lowering of the cost of borrowing would be appropriate.
The central bank of the United States currently adheres to an approach in its activities that stipulates that all decisions regarding monetary policy should be made taking into account data on the situation in the country’s economic system at a particular moment. The appropriate strategy allows the financial regulator to respond promptly to changes in the economy.
In the second half of last year, officials of the central bank of the United States made three decisions to lower the cost of borrowing. It is worth noting that in September, the corresponding process began with a sharp cutting of interest rates by half a percentage point. This decision by the US financial regulator came as a surprise to many experts, who assumed that at the initial stage of monetary policy easing, the central bank of the United States would make smaller-scale decisions.
There are two interest rates cuts in the US this year are expected. The corresponding forecasts are based on a kind of average opinion of officials of the central bank of the United States on the most appropriate approach to further easing monetary policy.
Christopher Waller said that the pace of interest rates cuts in 2025 will depend on how far the US financial regulator moves in the fight against inflation while keeping the labor market from weakening.
It is worth noting that Fed Chair Jerome Powell and several other policymakers signaled the impropriety of haste in the context of making decisions on further lowering the cost of borrowing. This position reflects ongoing concerns that inflation may accelerate.
