MNI BRIEF: Waller-Might Need More Hikes On Looser Conditions

The Federal Reserve could need to tighten monetary policy “a lot more” if financial conditions loosen materially, leading to stronger growth and a resurgence of inflation, Fed Governor Chris Waller said Friday.

“If this loosening of conditions makes things looser in the sense that growth takes off, employment doesn’t loosen and inflation starts to take off again then, yeah, we’re going to have to do a lot more,” he said during a Q&A after a speech at the Council on Foreign Relations. Waller has backed a 25bp hike at the next FOMC meeting.

“The market has a very optimistic view that inflation is just going to melt away. We have a different view. It’s going to be a slower, harder slog to get inflation down and thus we have to keep rates higher for longer and not cut them before the end of the year.” (See MNI INTERVIEW: Fed Rates To Peak Well Above 5%, No Cuts In 2023)