On Wednesday, Federal Reserve Governor Christopher Waller sent a stern message to the markets that the battle against inflation is far from over and may result in interest rates rising beyond what investors expect.
Christopher Waller: “We’re Seeing Improvements, But We’ve Got A Long Way To Go.”
Addressing an agribusiness conference in Arkansas, Christopher Waller declared that the January jobs report depicting a 517,000 expansion of non-farm payrolls displayed how vigorous the employment market is and could help consumer spending stay high enough to keep inflation in check. As such, he suggested that the Federal Reserve should stick with its strategy, which has included eight hikes on interest rates since March 2022.
Waller declared during his speech at the Arkansas State University Agribusiness Conference that they are starting to see their efforts yield results, yet there’s still a lot of work left. Unfortunately, it may be an extended battle due to interest rates being higher than many anticipate for longer periods. Waller further clarified that he will do whatever is necessary to accomplish his mission efficiently and effectively. His remarks come as one week has passed since the Federal Open Market Committee raised borrowing rates by 0.25 percent – pushing the benchmark target range up from 4% – 4.2%, reaching its highest level since October 2007, respectively.
Things Are Good But Not Sufficient To Lower Interest Rates
Markets have been taking hope from recent comments made by Federal Reserve Chair Jerome Powell, indicating that he has noticed disinflationary signs. Last summer’s inflation hit a historical high of 41 years, causing the Federal Reserve to abandon its claims of it being “transitory” and move into its present tightening trends. Economist Christopher Waller stated that, however, prices are still too high for his liking, with only moderate economic growth anticipated this year. He did mention wages trending in an encouraging direction, yet not enough to cause the Fed to reduce interest rates just yet.
“Many individuals think that inflation will rapidly decrease this year,” he declared. “We would be delighted if this were true, yet I am not witnessing any hints of a quick drop in the economic figures, and I’m prepared to persistently strive to bring inflation back down within our target range.”
Data from CME Group suggests markets anticipate two extra interest rate rises – one quarter-point each at both March and May’s meetings. Afterward, they forecast a single quarter-point cut by the end of 2020 as the economy cools off, possibly leading toward recession.
Waller declined to discuss his outlook on the direction of rates but stated that he believes the tight monetary policy will persist “for some time,” a phrase also frequently used by Powell and other Federal Reserve members.
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