Fed’s Waller warns interest rates will ‘continue to rise’ despite cooling prices

Federal Reserve Governor Christopher Waller said “we still have a lot of work to do” before the US central bank stops raising interest rates, despite good news on consumer prices last week.

At the same time, policymakers may begin to consider whether there is a pace to deceleration after four consecutive 75 basis points, and the Fed is considering a 50 basis point increase at its next meeting in December. or the meeting afterwards, Waller said.

“These rates are going to stay — keep going up — and they’re going to stay high for a while until we see this inflation drop closer to our target,” Waller said today. Monday at a press conference. UBS Corporation AG Conference in Sydney. “We still have a lot of work to do. This is not going to end in the next meeting or two.”

The comments echo comments this month from Fed Chairman Jerome Powell and other colleagues, who said the rate hikes are far from over but the pace is likely to slow soon.

Waller is one of the more hawkish policymakers of the US central bank advocating tighter policy to ease price pressures.

Inflation needs to continue to fall

Data last week showed US consumer prices cooled more than expected in October, with the consumer price index rising 7.7% from a year earlier compared with 8.2% the previous month.

Investors are betting that the Fed will raise rates by 50 basis points in December, according to futures market valuations, with the benchmark interest rate peaking at around 4.9% by mid-2023.

“It’s good that we’re finally seeing some evidence of inflation starting to come down,” Waller said. “We’re going to need to see a continuation of this kind of behavior for inflation starting to taper off before we really start thinking about taking the brakes off here.”

The Fed raised rates by 75 basis points on November 2 for the fourth straight meeting to a target range of 3.75% to 4% and said continued rate hikes were needed to counter The highest inflation in 40 years.

Powell told reporters after the decision that recent disappointing data showed interest rates would eventually need to move higher than previously expected, while also suggesting the central bank could scale back. increase immediately after December.

Officials in September forecast interest rates to hit 4.4 percent by the end of the year and 4.6 percent in 2023 — implying a half-point increase in December and a final quarter-point rise next year. . They will update their quarterly forecast next month.

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