Title: Fed Governor Waller Supports Two More Rate Hikes This Year, Urges July Increase
Date: July 14, 2023
Inflation concerns and solid economic performance prompt Federal Reserve Governor Christopher Waller to favor additional rate hikes this year, indicating a rate increase is likely at the upcoming July meeting.
During an event at New York University, Waller emphasized that the robust job market and overall strong performance of the U.S. economy provide room for further policy tightening. He mentioned that the recent stress in the banking sector, which led to the decision to maintain rates unchanged last month, appeared to have subsided.
Expressing his support for two more quarter-point rate hikes by the Federal Reserve in 2023, Waller emphasized that the first of these increases should occur at the upcoming meeting. He stated, “I see no reason why the first of those two hikes shouldn’t happen at our meeting later this month.”
Waller’s comments come in the wake of new data showing a reduction in inflationary pressures at the consumer level, inching closer to the Federal Reserve’s 2 percent target. However, this data has not deterred financial markets from anticipating a rate increase at the July 25-26 Federal Open Market Committee (FOMC) meeting. It does, however, cast doubt on the need for additional rate hikes later in the year, as predicted by the bank in June.
Although acknowledging the positive impact of softer inflation data, Waller cautioned against drawing conclusions from a single data point. He referenced a similar situation in the summer of 2021 when inflation briefly slowed before escalating again. Waller emphasized the need for sustained improvement in inflation before qualifying it as a slowdown.
Discussing the labor market, Waller noted its strength and highlighted that wage growth continues to exceed the level necessary to support inflation’s return to 2 percent.
The Federal Reserve’s decision on whether to raise the federal funds target rate (currently ranging from 5% to 5.25%) at the upcoming FOMC meeting will be closely watched by financial circles. Waller’s remarks indicate a favorable outlook for a rate hike, reinforcing the central bank’s commitment to managing inflation while ensuring a stable economic environment.
Time will tell if Waller’s suggestions are heeded, as the July meeting approaches and the Federal Reserve evaluates the economic landscape and future monetary policy adjustments.
Editor in charge: Shi Wenrui RF13549