Fed Governor Christopher Waller told Bloomberg TV yesterday that “the unemployment rate would have to drop fairly substantially, or inflation would have to really continue at a very high rate, before we would take seriously a rate hike in 2022”. Nevertheless, “I’m not ruling it out,” he added.
The US is now in a “different phase of economic policy,” he noted. Hence, ” it’s appropriate to start thinking about pulling back on some of the stimulus.” He’d be “all in favor” to phase out MBS purchases first, as “right now the housing markets are on fire; they don’t need any other unnecessary support.”
“I think everybody anticipates that tapering could move up earlier than when they originally thought,” Waller said. “Whether that’s this year, we’ll see, but it certainly could.”
“I myself would like to see tapering over before we consider raising rates; therefore if you think you may have to raise rates in late ’22 or early ’23, you pretty much want to get tapering done by the end of next year if possible,” he said.
