Federal Reserve Governor Waller Believes Inflation is Moderating Quickly, Leading to Support for Half-Point Rate Cut
Federal Reserve Governor Christopher Waller expressed his support for a half percentage point rate cut at the recent meeting, attributing it to the faster-than-expected decline in Inflation. Recent data on consumer and producer prices revealed that core Inflation, excluding food and energy, has been below the Fed’s target of 2%, prompting Waller to advocate for a more aggressive rate cut. While the consumer and producer price indexes showed slight increases, Waller emphasized that the trend is pointing towards a further decrease in Inflation, giving the Fed room to ease monetary policy to support the weakening labor market.
Prior to the meeting, the market had anticipated a 25 basis point cut, but the Fed surprised with a half-point reduction, bringing the key borrowing rate down to a range of 4.75%-5%. Waller mentioned the possibility of additional rate cuts depending on economic data and reiterated the importance of maintaining the Fed’s 2% Inflation target.
Looking ahead, the Fed is awaiting the release of the August report on the personal consumption expenditures price index to gauge Inflation levels. Chair Jerome Powell indicated that economists expect Inflation to be running at a 2.2% annual pace, down from 3.3% a year ago. Waller emphasized the importance of reacting to softening economic data by potentially implementing aggressive rate cuts to steer Inflation towards the target.
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Emily Jensen, graduated from the London School of Economics and Political Science (LSE) in the UK in 2015 with a degree in Economics. She specializes in financial markets and international trade. After graduating, she worked as an analyst at an investment bank in London, where she developed expertise in global economic trends. She later transitioned into consulting, focusing on fintech ventures and providing insights into global economic developments. Emily is passionate about the intersection of finance and technology and aims to drive innovation in the financial sector.