Federal Reserve Governor Christopher Waller said recent economic data signals policymakers can approach subsequent interest-rate reductions with less urgency than they applied at their gathering last month.
“I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting,” Waller said in prepared remarks on Monday at a conference at the Hoover Institution in Stanford, California. “We can proceed with moving policy toward a neutral stance at a deliberate pace.”
Waller pointed to the most recent labor-market figures, which showed a drop in the unemployment rate amid robust hiring, and upward revisions to job gains in prior months. Meanwhile, Waller called the latest inflation data, which came in hotter than estimated, “disappointing.”
Those data points followed the Fed’s decision to cut its key policy rate by a half percentage point in September, an outsize move that officials said was aimed at maintaining the strength of the labor market.
Waller said the economy is on solid footing, with employment near the Fed’s objective and inflation nearing policymakers’ 2% target. But, he added, recent data is signaling the economy may not be slowing as much as desired.
Still, Waller said his baseline calls for reducing rates gradually over the next year. He referenced Fed policymakers’ projections released in September, which estimated an additional 1.5 percentage points in interest-rate cuts by the end of 2025, according to the median forecast.
“There is a considerable extent of policy accommodation to remove, and if the economy continues in its current sweet spot, this will happen gradually,” Waller said.