Recent economic data should allow the Federal Reserve to at least consider stepping down the pace of its interest rate hikes at its next meeting in December, Fed Governor Christopher Waller said Wednesday.
“Looking toward the FOMC’s December meeting, the data of the past few weeks have made me more comfortable considering stepping down to a 50-basis point hike,” Waller said, in a speech to an economic forecasters meeting in Phoenix, Arizona.
Waller added that he won’t make a final judgement until he sees more data. The next Fed interest-rate committee meeting is on Dec. 13-14.
So far this year, the Fed has raised its benchmark federal funds rate at a rapid clip – from near zero to a range of 3.75%-4%, including four straight 0.75 percentage point hikes since June.
Earlier this month, Fed officials signaled earlier that they were mulling slowing down the pace of rate hikes.
But at the same time, Fed Chairman Jerome Powell told reporters that even at a slower pace, the Fed might move rates higher than the ultimate 4.5%-4.75% range most officials had expected last summer.
In his remarks, Waller said a 50 basis point hike in December would still be a very significant tightening action. With rates now at a level where they are starting to dampen economic growth, the benchmark rate “can still be increased quite rapidly with several 50-basis-point increases, a pretty aggressive path for policy.”
Waller compared the Fed’s policy path to an airplane flight. The first hikes were like a pilot firing the engines to get the plane off the ground. Now the level of rates is closer to cruising speed, the pilot can slow the rate of ascent while continuing to climb.
The Fed governor repeated a comment he first made on Sunday that the smaller-than-expected rise in consumer prices in October was welcome, but was only one data point.
“I don’t know how sustained this deceleration in consumer prices will be,” he said.
“I will not be head-faked by one report,” he said.