(Washington) A Fed governor ruled Thursday that further rate hikes are “probably unnecessary,” stressing that their current level appears restrictive enough to slow inflation, as April figures showed progress, too ” weak” however according to him.
“Central bankers should never say never, but the data suggests that inflation is not accelerating, and I think further increases in the policy rate are probably unnecessary,” Christopher Waller said during a speech in Washington , at the Peterson Institute of International Economics (PIIE).
The American central bank’s rates have been at their highest level in 20 years since July, between 5.25 and 5.50%.
“I think the likelihood of a rate hike is now very low,” Waller said.
Inflation had slowed rapidly in the United States at the end of 2023, encouraging the Fed to consider lowering them. But a rebound in prices at the start of 2024 led it to postpone this prospect.
In April, however, the rise in consumer prices resumed its downward trajectory, to 3.4% over one year compared to 3.5% in March, according to the CPI index.
This “was a welcome relief after three months without progress towards 2%,” commented Christopher Waller.
The Fed favors another measure of inflation, the PCE index, whose increase in March amounted to 2.7% over one year, and which it wants to reduce to 2%. April data will be released on May 31.
The Fed Governor, however, qualified this progress, reporting progress “so modest that it has not changed my view that I will need more evidence that inflation is slowing before supporting any easing of monetary policy”.
In other words: we will have to be patient before considering a rate cut again. Which means that credit will remain expensive for longer for households and businesses.
“The extent of progress was weak” in April, the Fed governor further underlined, specifying that “in the absence of a significant weakening of the labor market, it will take several more months of good figures inflation before we can comfortably support an easing of monetary policy.
On Monday, the two vice-presidents of the Fed, Michael Barr and Philip Jefferson, reiterated that interest rates would remain high for longer than expected, favoring a cautious approach after the rebound in inflation.