Federal Reserve (Fed) Board of Governors member Jan Waller spoke out in New York on Friday in favor of a quarter-percentage-point hike in rates at the board’s next meeting, scheduled for 31 January and February 1.
Given the data currently available and the slight disturbances in sight, I currently support the principle of a 25 basis point (0.25 percentage point) hike at the next meeting of the monetary policy committee (FOMC, editor’s note) , said Jan Waller.
Insofar as we were starting from rates close to zero in the spring, it was necessary to act quickly. But after a tightening of monetary policy of this magnitude, I thought in December that the direction taken was rather restrictive, explained Mr. Waller.
After strong increases and the use of monetary policy to drive up rates across the economy, it seems to me that now is the time to slow down, but not stop, the pace, he insisted.
The member of the board of the central bank justified this slowdown in the rise in rates that he considers necessary by that observed for inflation, which fell to 6.5% in December over one year according to the CPI price index.
This is excellent news, said Mr. Waller, who nevertheless said he remained cautious about the outlook for inflation and in favor of continued monetary tightening.
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Recalling that the slowdown in a number of economic indicators is in line with the effect expected from the monetary policy conducted by the Fed, Jan Waller recalled that the latter is not intended to bring the economy to a halt. We will therefore continue to monitor the various sectors in order to see how far these slowdowns go.
But if the current rate, included in a range between 4.25% and 4.50% for the main key rate, is the highest for 15 years, the American economy has held up well despite everything so far, has also believes Mr. Waller.
However, the pace of growth is slowing down little by little, which is both expected and desirable in our desire to reduce inflation.