Federal Reserve Governor Christopher Waller has said he is inclined to vote for another rate cut when officials meet later this month, although data due before then could be a reason to hold off.
“Right now, I’m inclined to support a rate cut at our December meeting,” Waller said in prepared remarks at the Fed’s framework review conference in Washington, sponsored by the American Institute for Economic Research. “But that decision will depend on whether the data we receive before then surprises to the upside and changes my forecast for the path of inflation.”
Waller said recent data raised concerns that inflation may have stalled above the 2% target, but added that there was “no indication” that prices in key service categories should remain at current levels or rise.
“I believe there is strong evidence that policy remains significantly restrictive, and further tapering will only mean that we are not pressing the brake pedal as hard,” Waller said in the text of his remarks. “Another factor supporting further rate cuts is that the labor market appears to be finally in balance and we should aim to keep it that way.”
Waller did not discuss the box review in the text of his remarks.
Fed officials began cutting rates in September after pushing them to a peak range of 5.25% to 5.5%, helping reduce inflationary pressures from a peak of 7.2% in mid-2022.
But investors in December futures are counting on some chance of a break in the cutting cycle after recent data showed sticky inflation in the services sector. The price index for personal consumption expenditures, excluding food and energy, rose 2.8% in the 12-month period ending in October.
While officials call their policy “restrictive,” U.S. gross domestic product expanded at an annual rate of 2.8% in the last quarter. Personal consumption remained strong along with business equipment consumption.
Chairman Jerome Powell has addressed the risk of a weakening labor market, but getting a clear picture of the data has been challenging due to strikes and storms. The Bureau of Labor Statistics will release its wage report for November on Friday. The next meeting of the Federal Open Market Committee will be held on December 17-18 in Washington.
