MNI BRIEF: Continued Disinflation Would See Fed Cuts-Waller

Federal Reserve Governor Chris Waller on Tuesday said continued disinflation over several months could require the central bank to lower the fed funds rate to keep real rates constant.

"If you see this [slower] inflation continuing for several more months, I don't know how long that might be—3 months? 4 months? 5 months?—that we feel confident that inflation is really down and on its way, that you could then start lowering the policy rate," he said after a speech at the American Enterprise Institute. "It has nothing to do with trying to save the economy or recession, it's just consistent with every policy rule I know from my academic life and as a policymaker. If inflation goes down, we would lower the policy rate."

"There's just no reason to say you would keep [the fed funds rate] really high and inflation is back at target," Waller said.