A top Federal Reserve official said Tuesday that he is increasingly confident that inflation will continue falling this year back to the Fed’s 2% target level, after two years of accelerating price spikes that hurt millions of American households. The official, Christopher Waller, an influential member of the Fed’s Board of Governors, noted that inflation is slowing even as growth and hiring remain solid — a combination that he called “almost as good as it gets.”
Quick Read
- Fed Official’s Confidence on Inflation: A top official from the Federal Reserve, Christopher Waller, expressed increasing confidence that inflation will fall back to the Fed’s 2% target level this year.
- Inflation Slowdown Amidst Growth: Waller noted that inflation is slowing down while economic growth and hiring remain strong, a situation he describes as “almost as good as it gets.”
- Interest Rate Cut Anticipated: The Fed is expected to cut its benchmark short-term interest rate this year, continuing a trend set in December when policymakers forecasted three rate cuts for the year. The first cut is widely expected by Wall Street investors and economists to occur in March.
- Waller’s Analysis: In his remarks to the Brookings Institution, Waller stated that the current data on economic and financial conditions, combined with his outlook, has bolstered his confidence that inflation is moving towards the 2% target.
- Historical Context of Inflation: Consumer inflation peaked at around 7% in mid-2022, leading the Fed to implement 11 interest rate hikes since March 2022, the highest level in 22 years. However, year-over-year inflation had decreased to 2.6% by November.
- Economic Expansion with Low Unemployment: The economy is still expanding modestly with a low unemployment rate of 3.7%, close to a half-century low, even as inflation cools.
- Outlook on Economic Trajectory: Waller expressed optimism about the economy continuing its current trajectory, with inflation returning to the targeted level and stable economic growth.
The Associated Press has the story:
Top Federal Reserve official voices optimism that inflation will keep slowing, with rate cuts coming
Newslooks- WASHINGTON (AP) —
A top Federal Reserve official said Tuesday that he is increasingly confident that inflation will continue falling this year back to the Fed’s 2% target level, after two years of accelerating price spikes that hurt millions of American households.
The official, Christopher Waller, an influential member of the Fed’s Board of Governors, noted that inflation is slowing even as growth and hiring remain solid — a combination that he called “almost as good as it gets.”
Waller’s remarks follow recent comments from other senior Fed officials that suggest the central bank remains on track to cut its benchmark short-term interest rate this year. In December, the Fed’s policymakers collectively forecast that they would cut their rate three times this year. Wall Street investors and many economists expect the first cut in March.
“The progress I have noted on inflation, combined with the data in hand on economic and financial conditions and my outlook has made me more confident than I have been since 2021 that inflation is on a path to 2%,” Waller said in written remarks to the Brookings Institution.
Consumer inflation, according to the Fed’s preferred measure, soared to about 7% in mid-2022, compared with a year earlier. In response, beginning in March 2022 the Fed hiked its key rate 11 times, to its highest level in 22 years. Year-over-year inflation fell to 2.6% in November, the Fed’s measure showed.
Waller suggested that the economy is continuing to expand modestly, with the unemployment rate at just 3.7%, not far above a half-century low, while inflation cools.
“But will it last?” he asked. “In the end, I am feeling more confident that the economy can continue along its current trajectory.”
