Fed governor favors higher interest rates unless inflation cools down

ISTANBUL

US Federal Reserve Governor Christopher Waller said he would favor higher interest rates for the central bank unless consumer inflation cools down.

"Recent data suggest that consumer spending isn't slowing that much, that the labor market continues to run unsustainably hot, and that inflation is not coming down as fast as I had thought," he wrote in his prepared statement for the Mid-Size Bank Coalition of America event in California.

Fed's preferred inflation indicator, the core personal consumption expenditures (PCE) price index rose 4.7% annually in January, up from a 4.6% year-on-year gain in December, and coming higher than the market estimate of a 4.3% increase, according to figures released last week.

On a monthly basis, the core PCE price index rose 0.6% in January, up from a 0.4% monthly gain in December, and higher than the market estimate of a 0.4% increase.

Waller stressed if those data continue to come in "too hot," the Fed's policy target range will have to be raised even more this year, to ensure that the central bank "do not lose the momentum" that was in place before the data for January were released.

"I would be very pleased if the data we receive on inflation and the labor market this month show signs of moderation, which would suggest that the February data releases were just a bump in the road and that progress is continuing," said the statement.

The Fed governor, on the other hand, would support raising interest rates a couple more times to a terminal rate between 5.1%- 5.4% this year, if inflation declines significantly.

Fed made a rate hike of 25 basis points on Feb. 1, raising the target range for the federal funds rate to 4.5% to 4.75%. Its next two-day meeting will conclude on March 22, when its economic projections will also be released.

Waller's webcast event was canceled as one participant started displaying explicit images minutes before the start of the event, but his prepared remarks were published on the Fed's official website.

ISTANBUL

US Federal Reserve Governor Christopher Waller said he would favor higher interest rates for the central bank unless consumer inflation cools down.

On a monthly basis, the core PCE price index rose 0.6% in January, up from a 0.4% monthly gain in December, and higher than the market estimate of a 0.4% increase.

The Fed governor, on the other hand, would support raising interest rates a couple more times to a terminal rate between 5.1%- 5.4% this year, if inflation declines significantly.

Waller's webcast event was canceled as one participant started displaying explicit images minutes before the start of the event, but his prepared remarks were published on the Fed's official website.