The member of the institution’s Monetary Committee notes that the latest economic data underlines that the inflationary risk has not disappeared.
The American Federal Reserve (Fed) must be “more cautious” about the pace of its next rate cuts, while the latest economic data highlights that the inflationary risk has not disappeared, one of the officials said on Monday. the central bank of the United States.
“I believe that all the data indicates to us that monetary policy must be carried out with more caution regarding the pace of reductions compared to that carried out in September,” Christopher said during a speech in California. Waller, one of the members of the Monetary Committee (FOMC) of the institution.
At its last meeting in mid-September, the FOMC decided to lower the Fed’s main rate by 50 basis points, bringing it to a range between 4.75% and 5.00%.
During the summer, concerns were expressed that the Fed had waited too long to act, taking the risk of seeing the economy slow down, while unemployment seemed to be rising again.
But the latest data showed that the American economy remained solid, with unemployment falling to 4.1% in September and job creation on the rise.
Another Fed official, John Williams, noted on October 8 that the American economy “continues to grow,” while “the labor market is doing very well” and remains “solid but very balanced.”
John Williams, however, also estimated that the next rate cuts should not be as significant. “I don’t want to see the economy weaken,” he said.
The CPI inflation index in the United States – on which pensions are indexed – fell to 2.4% year-on-year in September, compared to 2.5% in August, its lowest level since February 2021.
The Fed, which must maintain stable prices and ensure conditions for full employment, favors the PCE index to measure inflation, which it wants to reduce to 2%, and which will be updated later in the month.
It had fallen to 2.2% over one year in August, getting closer to the target, definitively convincing the Fed to lower its rates by 50 basis points in mid-September.
Markets generally expect a 25 basis point cut at its next meeting, scheduled for November 6-7, then another of the same magnitude at the last meeting of the year, in mid-December, according to the CME monitoring tool, FedWatch.
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