WASHINGTON (AP) 鈥� Christopher Waller, a key Federal Reserve official, added his voice Wednesday to a who have suggested that the central bank will likely slow the pace of its interest rate hikes beginning in December.
Waller, a member of the Fed's Board of Governors, said he was open to raising the Fed's key rate by a half-point next month in light of evidence that inflation may be cooling.
At each of its four most recent policy meetings, the central bank has . The cumulative effect has been to make many consumer and business loans costlier and to raise the risk of a recession.
At the same time, Waller stressed that inflation remains painfully high. And he cautioned that there have been occasions in the past when economists thought inflation was falling only to see prices reverse course and accelerate again.
鈥淭he data of the past few weeks have made me more comfortable considering stepping down to a (half-point) hike," Waller said in a speech in Phoenix. 鈥淚t is important to remember that this would still be a very significant tightening action.鈥�
The Fed has raised its key short-term rate this year at its fastest pace since the early 1980s 鈥� to a range between 3.75% and 4%, the highest level in about 15 years.
Those hikes have increased borrowing costs for mortgages, auto loans and credit cards, among other loans. Fed officials intend the higher rates to slow borrowing and spending and cool inflation pressures.
Waller鈥檚 remarks followed comments earlier Wednesday from Mary Daly, president of the Federal Reserve Bank of San Francisco. Daly said in an interview with CNBC that the Fed will likely raise its short-term rate at least a full percentage point above its current level.
She also said there has so far been no discussion among Fed officials about whether to pause their rate hikes if inflation continued to moderate.
鈥淧ausing," Daly said, 鈥渋s off the table right now 鈥� it鈥檚 not even part of the discussion.鈥�
Both Waller and Daly took pains, like Chair Jerome Powell to emphasize that rates will ultimately go higher even as the Fed raises them in smaller increments.
Waller also underscored his view that the inflation report for October, which showed slower price increases, was just one data point and not necessarily solid evidence that inflation is declining.
鈥淚 cannot emphasize enough that one report does not make a trend,鈥� he said. 鈥淚t is way too early to conclude that inflation is headed sustainably down.鈥�
Waller noted that inflation had shown signs of slowing late last year before heading higher again.
鈥淚 will not be head-faked by one report and will continue to watch the data between now and the December (Fed) meeting,鈥� he said.
On Monday, Lael Brainard, the Fed's vice chair,
Market traders now foresee an 85% likelihood of a half-point rate increase at the Fed鈥檚 mid-December meeting, according to the
Some of Waller's comments about rate hikes Wednesday were harder-line than Brainard's were. In response to a question, for example, Waller said that the current unemployment rate 鈥� at 3.7%, it is near a 53-year low 鈥� means the Fed can focus primarily on fighting inflation.
鈥淲e are not seeing the typical trade-off between ... driving down inflation and causing all these job losses and high unemployment," he said.
Waller noted that even while the Fed has sharply raised its key short-term rate, employers are still hiring at a healthy clip.
As a result, he said, the Fed should 鈥渢ackle inflation ... the job market is giving this to you. Don鈥檛 be cautious, don鈥檛 be afraid.鈥�
In her remarks, though, Brainard suggested that the Fed's key rate is already high enough to restrain the economy. As it moves higher, the central bank should increasingly consider the risk that the economy might tumble into a recession, she said.
Christopher Rugaber, The Associated Press
