Federal Reserve Governor Chris Waller has joined a growing group of policymakers urging the central bank to signal that its next move may not necessarily be an interest rate cut, as inflation pressures remain elevated, according to a report by AFP.
Inflation Concerns Persist
The comments come as the US economy continues to grapple with stubborn price pressures. Consumer inflation reached a three-year high in April, driven by rising energy prices linked to the ongoing Iran conflict. In prepared remarks for a lecture in Frankfurt on Friday, Waller stated: "Inflation is not headed in the right direction."
Removing the 'Easing Bias'
Waller elaborated: "Based on this recent data, I would support removing the 'easing bias' language in our policy statement to make it clear that a rate cut is no more likely in the future than a rate increase." However, he clarified that this does not imply an immediate move toward higher rates. He said he does not expect interest rate increases "in the near future" and would support a pause on policy changes "for the near term."
Divided Committee
The US Federal Reserve kept rates unchanged at its Open Market Committee (FOMC) meeting in late April, though policymakers were divided over the future policy path. According to AFP, three Fed regional presidents had backed removing the easing-bias language, while one governor supported a rate cut. Following Waller's comments, one-third of the 12-member rate-setting committee now supports the proposed shift in language.
New Leadership and Outlook
Incoming Federal Reserve chair Kevin Warsh, who is due to be sworn in on Friday, has previously supported rate cuts and is expected to lead a divided committee at the next policy meeting in June. Waller noted that the future direction of inflation could depend significantly on developments in West Asia. "It is time to simply sit and watch how the conflict and the data evolve," he said.
This development underscores the ongoing uncertainty in US monetary policy as the Fed balances inflation risks against economic growth.
