During a speech at Stanford University’s Hoover Institution on Monday, Federal Reserve Governor Christopher Waller mentioned that recent economic data indicates a less urgent need for policymakers to cut interest rates compared to last month’s meeting. Minneapolis Federal Reserve President Neel Kashkari also noted that a “further modest reduction” in the benchmark rate seems appropriate over the coming quarters.
Waller stated, “I believe that overall data suggests monetary policy should proceed more cautiously with rate cuts than we did in September.”
He added that if the current economic conditions persist, “we can continue to adjust our policy towards a neutral stance cautiously.” A neutral interest rate is one that neither restrains nor stimulates the economy.
Waller pointed out that recent labor market data shows a decline in the unemployment rate amidst strong hiring, with job growth in previous months being revised upward. However, he described the latest inflation figures, which surpassed expectations, as “disappointing.”
Speaking during a meeting of the Argentinian central bank in Buenos Aires, Kashkari stated, “Ultimately, the future direction of policy will be dictated by actual economic performance, inflation, and labor market data.”
He characterized the Fed’s current stance as restrictive, although the extent of that restriction remains unclear.
Kashkari highlighted the strength of the labor market, calling recent employment reports “encouraging, suggesting that the labor market is unlikely to weaken anytime soon.” He noted that while inflation has “significantly declined from its peak, it still remains slightly above our target.”
Kashkari expressed satisfaction with the Fed’s recent decision to cut rates by 50 basis points in September, and suggested that two additional cuts of 25 basis points each in the remaining meetings of the year would be a “reasonable starting point.” The Fed is set to announce its next interest rate decision at the conclusion of its meeting on November 6-7.
