Fed’s Waller increasingly confident that policy is well positioned

Fed Governor Christopher Waller, in his speech at the American Enterprise Institute think tank overnight, stated that inflation rates “moving along pretty much like” he expected and expressed increasing confidence in Fed’s policy’s effectiveness in slowing the economy and steering inflation back towards 2% target.

Waller’s confidence also extends to managing this economic slowdown without significantly impacting the unemployment rate, which currently stands at 3.9%.

Furthermore, Waller discussed the possibility of lowering the policy rate in the future, conditional on the continued decline of inflation.

He suggested that if the downward trend in inflation persists for several months – “three months, four months, five months” – Fed could consider “lowering the policy rate just because inflation is lower.”

This approach, he clarified, is not aimed at “trying to save the economy” but is consistent with established “policy rules”. Waller emphasized that there is no rationale for maintaining excessively high rates if inflation consistently decreases.