When Will the US Federal Reserve Cut Interest Rates? Insights from Christopher Waller

© Reuters Christopher Waller explains when the US Federal Reserve will decide to cut interest rates

Arabictrader.com – US Federal Reserve Member Christopher’s statements today, Wednesday, addressed the following points:

It is too early to know whether further policy action is needed. Further action on interest rates will be needed if demand and economic activity continue at the same recent pace. The US Federal Reserve can wait, watch and see before issuing final news on the course of monetary policy. If the real economy slows, we can have the US Federal Reserve keep monetary policy steady. Data for the past few months have been very positive for employment and inflation targets. I will be monitoring how the recent rise in long-term interest rates develops and its impact on the economy and financial conditions. I will be patient while waiting for the data needed to document how spending evolves. The unusually tight labor market is expected to continue to ease, but watch closely. The US Federal Reserve will be monitoring the next several inflation reports to get a clearer signal about the 2% level. If inflation falls to 2.5%, we may be in the process of cutting interest rates. We can reduce our balance sheet by $2 trillion to $2.5 trillion and maintain ample reserves. We need to see how inflation develops within 6 to 12 months, and then see interest rates cut. We still have one rate hike to go, and it will be entirely data driven if or when that happens. For any reason that leads to a tightening of monetary policy. If long-term interest rates rise and continue, this would prompt some members of the US Federal Reserve to take action. It still appears that the potential excess consumer saving is greater than people think. Consumer spending was surprising. There is still hope that a rate hike will slow spending and inflation.

It should be noted that economists at Danske Bank confirmed in a research note that American labor markets have proven their ability to withstand surprisingly well in the face of the monetary tightening approach adopted by the US Federal Reserve.

The Danish bank’s economists added that they are more likely that the US Federal Reserve will maintain interest rates at the current restrictive levels rather than raise interest rates further, especially given the recent tightening in financial conditions and the rise in bond yields.

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2023-10-21 15:38:00
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