US Fed official favors smaller rate hike in February

US Fed official favors smaller rate hike in February

Federal Reserve Governor Christopher Waller said he favors a smaller interest rate hike at policymakers' upcoming meeting
Federal Reserve Governor Christopher Waller said he favors a smaller interest rate hike at policymakers' upcoming meeting. Photo: Sarah Silbiger / GETTY IMAGES NORTH AMERICA/Getty Images via AFP/File
Source: AFP

PAY ATTENTION: How media literate are you? Click to take a quiz – bust fake news with Legit.ng!

There is ample evidence that a steep climb in interest rates has dampened demand and economic activity, suggesting the US central bank can further slow its rate hikes, Federal Reserve Governor Christopher Waller said Friday.

Nearly a year since the Fed started tightening monetary policy to curb surging inflation, industrial production has fallen and the construction and real estate sectors have slowed, while consumer spending growth has started to ease.

Inflation has been moderating as well, coming down from a blistering 40-year high last June to 6.5 percent in December.

"Based on the data in hand at this moment, there appears to be little turbulence ahead, so I currently favor a 25-basis point increase at the (Fed's) next meeting," Waller said in prepared remarks for an event in New York.

Read also

US home sales slump for 11th month, slammed by mortgage rates

Over the past year, the Fed has raised rates seven times including four steep 75-basis point jumps before slowing to 50 basis points in December.

But Waller warned that policymakers have "a considerable way to go" towards their two percent inflation goal.

PAY ATTENTION: Join Legit.ng Telegram channel! Never miss important updates!

"I expect to support continued tightening of monetary policy," he said.

While inflation has cooled, a major reason recently has been a significant drop in energy prices.

Stripping out the volatile food and energy segments, core inflation ticked up from November to December, signaling cause for caution, Waller noted.

"While it is possible to take a month or three months of data and paint a rosy picture, I caution against doing so," he said.

But the labor market remains robust, showing that jobs and income can hold up despite rising interest rates.

The United States has so far managed to make progress on lowering inflation without seriously hurting the labor market, Waller said.

"I remain optimistic that this progress can continue," he said.

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.