MNI: Fed’s Waller Calls For ‘More Caution’ On Pace Of Cuts
MNI (WASHINGTON) - Federal Reserve Governor Chris Waller said Monday recent strong economic data mean the central bank can proceed more cautiously after kicking off the easing cycle with a 50 basis point rate cut in September.
“While we do not want to overreact to this data or look through it, I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting,” Waller said in prepared remarks to the Hoover Institution.
“I will be watching to see whether data, due out before our next meeting, on inflation, the labor market and economic activity confirms or undercuts my inclination to be more cautious about loosening monetary policy.”
Overall, Waller says falling inflation and a cooler labor market still warrant less restrictive monetary policy.
“Whatever happens in the near term, my baseline still calls for reducing the policy rate gradually over the next year,” he said. (See MNI POLICY: Fed To Scale Back To 25BP As US Outlook Stays Rosy)
BRIGHTER OUTLOOK
Waller said upward revisions to GDI figures showed that growth, consumers spending and the savings rate were all on a much stronger footing than feared.
“These revisions suggest that the economy is much stronger than previously thought, with little indication of a major slowdown in economic activity,” he said.
At the same time, a much stronger than expected September job market report pushed back concerns that employment conditions were on the verge of deteriorating sharply.
“Only a couple months ago, it appeared that the labor market was cooling too quickly,” Waller said. The latest data and revisions have shifted that view, he said. “While job creation has moderated and the unemployment rate has risen over the past year, the labor market remains quite healthy.”