The Federal Reserve governor said he favors another “significant” interest rate hike for a third consecutive month, which will further increase mortgage payments for inflation-ridden Americans.
Christopher Waller backed the central bank with what is known as a 75 basis point move, or 0.75% increase, during a speech in Austria on Friday, according to Bloomberg.
Waller, while noting that inflation was still “far too high”, said: “I support a significant increase at our next meeting on September 20-21 to bring the policy rate to a level that clearly restrains demand” .
His speech likely means interest rates will rise further after the monthly inflation report for August 2022 is released on Tuesday.
It stood at 8.5% in July, down slightly from the record high of 9.1% the previous year, but still at a figure last seen in the early 1980s.
Waller’s comments mean the Fed remains committed to curbing some of the highest levels of inflation in US history.
It does this by raising the base interest rate, which is then adjusted for all loans and borrowings made by Americans.
Anyone who does not benefit from fixed-rate refunds must repay more, a move aimed at stifling demand in hopes of cooling the economy.
Federal Reserve Governor Christopher Waller (pictured) has said he favors what he calls another “significant” interest rate hike for a third consecutive month.
Christopher Waller backed the central bank with what is known as a 75 basis point move, or 0.75% increase, during a speech in Austria on Friday, according to Bloomberg.
Fed Chairman Jerome Powell had already kept the option open for the hike, which is backed by many bankers in a desperate attempt to control inflation.
Bloomberg polled a group of economists who suggested the rise in August would be around 8.1% from July’s 8.5%. This is credited to lower gas prices.
However, Waller is still worried: “While I welcome the promising news on inflation, I do not yet see convincing evidence that it is falling significantly and persistently along a path to reach our target of 2 %.”
He said the Fed would continue to take “significant steps” to control policy and added that rate hikes could continue through early 2023.
It comes after the number of open jobs in the United States rose in July after three months of decline, a sign that employers are still urgently looking for workers despite a shrinking economy and high inflation.
Waller backed the central bank by making what is known as a 75 basis point move, or 0.75% increase, during a speech in Austria on Friday, according to Bloomberg.
There were 11.2 million open jobs available on the last day of July – almost two jobs, on average, for every unemployed person – compared to 11 million in June. The June figure was also revised upwards.
The increase announced by the government on Tuesday will be a disappointment for Federal Reserve officials, who seek to cool hiring and the economy by raising short-term interest rates in an attempt to slow borrowing and spending, which tend to fuel inflation.
Fed officials hope their policies will serve primarily to reduce job openings and spare workers the pain of widespread layoffs and rising unemployment.
“The Fed has made very little progress in terms of closing the gap between labor supply and demand,” Aneta Markowska, chief economist at investment bank Jefferies, wrote in a statement. research note.
There were 11.2 million open jobs available on the last day of July – almost two jobs, on average, for every unemployed person – compared to 11 million in June. The June figure was also revised upwards
Fed officials hope their policies will serve primarily to reduce job openings and spare workers the pain of widespread layoffs and rising unemployment
Reducing the strong demand for workers to a level closer to the available supply would ease the pressure on companies to pay higher wages in order to attract and retain workers.
Many companies passed on the higher wages to consumers in the form of higher prices, thus intensifying inflation.
Last month, job openings rose in retail, warehousing and shipping, professional services, and state and local education. Openings fell in manufacturing and health care.
#Fed #Governor #Christopher #Waller #warns #consecutive #interest #rate #imminent