Federal Reserve Governor Christopher Waller said on Thursday that further interest rate increases will likely be necessary to lower inflation to the central bank’s 2% target. Speaking to the Money Marketeers of New York University, Waller noted that policymakers have “flexibility” in determining the pace of future actions and that decisions will depend on incoming economic data.
In his remarks, Waller addressed the Federal Open Market Committee’s (FOMC) ongoing efforts to manage inflation. “Inflation is still far too high, and it is my job to get it down to our 2% target,” Waller stated. He emphasized that future policy decisions are not on a “preset course” and would be guided by economic reports released before each meeting.
Waller’s comments follow a series of policy adjustments by the Federal Reserve. Since March 2022, the central bank has raised the federal funds rate eleven times, bringing it to a target range of 5.25% to 5.50%, a 22-year high. The most recent increase of a quarter-percentage point was announced in July.
The Federal Reserve operates under a dual mandate from Congress: to promote maximum employment and stable prices. Waller referenced recent economic indicators that inform the committee’s decisions. The latest Consumer Price Index (CPI) report from the Bureau of Labor Statistics showed that inflation rose 3.7% in the 12 months ending in August, a figure that remains above the Fed’s target.
At the same time, the labor market has shown continued resilience. According to the Department of Labor, the U.S. economy added 187,000 jobs in August, and the unemployment rate was 3.8%.
Regarding the FOMC’s next policy meeting scheduled for October, Waller did not commit to a specific action. He indicated that the committee would assess the full scope of economic data before deciding whether to implement another rate hike or hold rates steady.
Waller’s speech is one of several public appearances by Fed officials as they communicate the central bank’s position ahead of upcoming policy meetings. The FOMC’s decisions influence borrowing costs for consumers and businesses, affecting mortgages, credit cards, and business loans. The committee’s next meeting will conclude on November 1.
