A member of the US Federal Reserve Board of Governors, Christopher Waller stresses the importance of making the fight against inflation a priority for the financial authority, considering it a “battle”.
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United States: key interest rates currently range between 2.25 and 2.50%
Christopher Waller, a member of the Board of Governors of the US Federal Reserve (Central Bank), stressed today, Friday, that the fight against inflation should be made a priority for the financial authority, which intends to continue raising interest rates until the beginning of the year 2023 at least, to limit the rise in prices.
Waller said that “the actual and sustainable return of inflation towards the 2% target, will require raising key interest rates until the beginning of next year,” noting that the pace of this mechanism depends on the extent to which the economic situation improves.
Waller stressed, in a speech in Vienna (Austria), “we will continue to fight inflation aggressively”, describing it as a “battle”.
The Federal Reserve has been raising interest rates, since March, to slow the pace of demand and reduce prices, and the main interest rates currently range between 2.25 and 2.50%.
The Federal Reserve will hold its next meeting, on September 20 and 21, after which it is expected to announce an increase in key interest rates by three quarters of a percentage point.
Waller added that he supports a significant increase in key interest rates to allow the pace of demand to slow, but warned that reducing inflation to around 2%, which is considered appropriate for the economic wheel, “will take time.”
Inflation in the United States slowed in July, after hitting its highest level in more than 40 years in June. But inflation, currently at 8.5% year-on-year, is still very high.
“It is too early to say that inflation is slowing significantly and sustainably,” Waller said, adding that fears of recession “have dissipated and the strong performance of the US labor market enables us to take a hard-line approach to fighting inflation.”
He continued, “We did not enter a recession in the first quarter of 2022,” noting that the numbers “confirm that the Federal Reserve has achieved its goal” with regard to reducing unemployment.
He added, “My interest is focused on reducing inflation,” stressing that there are “indications that indicate a decline in economic activity,” especially in the real estate market.
He pointed out that “while continuing to raise interest rates, we have to monitor on a monthly basis how households and companies adjust to tighter financial conditions, and how this adjustment affects inflation.”