MNI BRIEF: Fed Easing Cycle Can Begin In Smaller Steps -Waller

Federal Reserve Governor Christopher Waller on Wednesday said the central bank's easing cycle can begin later and in smaller steps, adding that there is no reason to have "big cuts in policy."

"When we've gone fast in the past in cutting rates it's almost always because some shock has hit the economy," he said in Q&A at the Economic Club of New York after a speech. "When the economy is doing fine, there's no reason to do really big movements [in the fed funds rate]. So, you can do smaller movements, then the only issue is, do I start doing small movements now? Or do I wait a meeting or two meetings or three meetings, and then go in smaller steps...It's not that if we wait, we're gonna have to go big. We can still go small. It's just, when is the starting point? Right now the economy has given us no reason that we have to do big, big cuts in policy." (See: MNI INTERVIEW: Fed Will Bide Its Time On Rate Cuts-Lockhart)

Asked whether his preference for seeing a couple months of better inflation data means that he'd take a cut off the table for the May FOMC meeting, Waller declined to rule it out. "A couple months is a couple of months. We're getting two more [inflation] reports before May. Could be. Maybe not. Depends," he said, noting he was keeping his answer "ambiguous."