Christopher Waller, Federal Reserve Governor, announced on Wednesday, 16th November, that he would lower interest rate hike cycles if economic data shows favorable results.
The Federal Open Market Committee, which sets interest rates, will hold a two-day meeting on December 13th and 14th.
The financial market is rallying in anticipation that lawmakers will ratify another rate hike, choosing a 0.5% increase or 50 basis points instead. That would follow the approval of four successive 0.75 percentage point increases.
PCE Inflation is Scheduled For December 1st
Waller had confirmed that the possibility of pushing rate hikes down to a 50 basis point is increasing as the inflation data for the last few weeks have been somewhat favorable.
He explained that he won’t be making any quick decisions just yet, and will continue to observe, for now, watching new data reports to make sure to take the proper steps.
He said he would watch the employment rate report and the PCE inflation data scheduled to be released on December 1st.
Meanwhile, Investors have become confident and hopeful that a less-than-anticipated rise in the consumer price index (CPI) for October is displaying signs that the inflation rate is slowing.
According to reports, the headline CPI improved by 0.4% for October and 7.7% compared to the previous year. On the other hand, the core reading, excluding sustenance and energy, improved by 0.3% and 6.3%. The data reports were all relatively below-market outlooks in every instance.
Waller Confirms That a Positive Result in Three Primary Data May Lead to Anticipated Rate Decreases
Waller had explained to the markets that although the October inflation reports are favorable and pleasant, the market still needs to be careful and watchful of future data because concluding on just one report would be highly ineffective.
He said he had no idea how long the inflation reports and CPI would stay down, as one pleasant report does not make an automatic new trend. He concluded that it was too soon to make a hasty decision and surmised that inflation was on a downward trajectory.
While making his assessment, Waller explained that in the following reports, he would search for three essential data points besides the average inflation data. These points include; primary goods prices, accommodation, and non-housing services.
He confirmed that current reports are showing good numbers in all three points; however, he still needs to be assured and will observe more data not to be deceived by only one pleasant report.
He said that he feels just as hopeful as the market and its investors that the current inflation data reports will decline; however proper policy cannot be implemented on just expectations and hopes.
Previously on Wednesday, Mary Daly, president of the San Francisco Fed, stated on CNBC that she anticipates future rate gains of at least one more percentage point.