Waller: 50bp Hike In March Possible, Data-Dependent

Fed Governor Waller notes that he believes a 50bp hike is on the table in March if incoming data continues to point to an exceedingly hot economy. Waller also points to the need for 100bp of tightening by mid-year (a la Bullard, who Waller worked under at the St. Louis Fed).

• Waller notes that inflation levels are “alarming,” creating a need to act promptly. Stressing that the Fed should point to getting back to the neutral rate as soon as possible. He remains hopeful that inflation will come down significantly by year end, if the appropriate monetary policy steps are undertaken.
• Waller doesn’t see the need for asset sales “any time soon,” but could consider MBS sales down the road. He also notes that caps re: the balance sheet run off should be large, and that B/S run off should be in play by July, at the latest,
• Waller suggests that it is far too early to judge the impact of the Ukraine situation, although it does add to uncertainties and could result in a more modest round of tightening.