Federal Reserve Governor Waller: Further rate hikes are still needed, but they need not be consecutive.

On Thursday, October 8, Federal Reserve Governor Waller stated that further rate hikes may still be necessary to bring inflation back to the Fed's 2% target, but he emphasized that the pace of rate hikes has a degree of "flexibility," leaving room for the Federal Reserve to pause rate hikes at its upcoming October policy meeting.

Waller said, “If economic data continue to meet expectations, I anticipate that further rate hikes will still be needed to push inflation back to the 2% target level more quickly.” “However, there is flexibility regarding when these rate hikes are implemented. We do not need to raise rates at consecutive meetings, but should complete the necessary rate hikes within a reasonable timeframe.”

Waller did not specify how much higher policy rates ultimately need to rise to curb inflation, which currently remains more than one percentage point above the Fed's target. However, he noted that the necessity of raising rates has become increasingly apparent given the strengthening US economy, the lingering energy price shock from the war in Iran, and rising demand for key goods and services driven by AI infrastructure construction, which is further exacerbating inflationary pressures. (Jinshi)