Fed’s Waller: There is no rush to cut US interest rates

The Federal Reserve (Fed) Governor Christopher Waller said on Thursday that there is no rush to begin cutting interest rates. He further stated that he will need to see further evidence that inflation is cooling before he is willing to support interest rate cuts.

Key quotes

“The start of policy easing and the number of rate cuts will depend on incoming data.”

“The Committee can wait a little longer to ease monetary policy.”

“Puzzled by the narrative that delaying cuts for a meeting or two risks causing a recession.”

“Supposed asymmetry of lagged effects of rate hikes vs. rate cuts is not supported by any model I’m aware of.”

“In the absence of a major economic shock, delaying cuts by a few months should not have a substantial impact on the economy in the near term.”

“Cutting too soon could squander inflation progress and risk considerable harm to the economy.”

“Data received since the last speech on Jan 16 has reinforced the view that we need to verify inflation progress from the last half of 2023 will continue.”

“There is no rush to begin cutting interest rates.”

“The CPI report last week is a reminder that ongoing progress on inflation is not assured.”

“It's not clear yet if the CPI was driven by odd seasonal factors and outsized housing cost increases or signals inflation is stickier than thought and will be harder to bring down to target.”

“Need to see more data to know if January CPI was'more noise than signal’."

“This means waiting longer before having enough confidence that starting rate cuts will keep us on the path for 2% inflation.”

“The strength of output and employment growth means there 'is no great urgency' to ease policy.”

“Still expect to ease policy this year.”

“Recent hotter-than-expected data validates Chair Powell's 'careful risk management approach’."

“The risk of waiting a little longer to ease is lower than the risk of acting too soon.”

“Several indicators suggest some slowing in growth.”

“Latest data on job openings and quits may indicate labor market moderation may have stalled.”

“Based on CPI and PPI, January core PCE may be 2.8% at a 12-month rate, 2.4% at a 3-month rate, and 2.5% at a 6-month rate.”

“It's comforting to know the progress we made was real and not a mirage.”

“Still see wage growth 'somewhat elevated' to achieve a 2% inflation goal.”

“Watching to see if housing costs continue to run higher than expected.”

“Considering all inflation aspects, 'I see predominantly upside risks' to the expectation inflation will keep moving to the 2% goal.”

“Need to see a couple more months of inflation data to be sure if January was a 'fluke' and we are still on track to price stability.”

“There are no indications of an imminent recession.”

Market reaction 

The US Dollar Index (DXY) is trading lower on the day at 103.91, as of writing.