On October 14, Fed Governor Christopher Waller delivered a speech at the Hoover Institution at Stanford University, emphasizing that, based on overall data, any future rate cuts should be approached more cautiously than during the September meeting. He noted that recent economic indicators suggest there’s less urgency for policymakers to lower rates.
Waller stated, “I believe that the overall data indicate monetary policy should adopt a more careful approach to rate cuts than we discussed in September.” He elaborated that if the current economic conditions persist, “we can continue to navigate towards a neutral stance with a cautious pace.” A neutral interest rate is one that neither suppresses nor stimulates the economy.
He highlighted that recent labor market data shows a decline in unemployment alongside strong hiring, and employment growth from previous months has been revised upward. However, Waller expressed disappointment regarding the latest inflation figures, which were above expectations.
Waller also mentioned that in the short term, factors such as hurricanes and the Boeing strike may complicate interpretations of the labor market. He estimates that job growth in October could be around 100,000 fewer than in September and predicts a gradual slowdown in job growth with an associated increase in the unemployment rate, though he maintains that it will remain historically low. “We are currently in a strong position, and it’s our job to maintain that,” he remarked.
On the same day, Minneapolis Fed President Neel Kashkari discussed the future direction of policy during a meeting in Buenos Aires hosted by the Central Bank of Argentina. He stated, “Ultimately, the future path of policy will depend on actual economic, inflation, and labor market data.”
Kashkari characterized the Fed’s current policy stance as somewhat restrictive but noted that the extent of this restriction remains uncertain. He remarked that the labor market is still robust, with recent employment reports being “encouraging, indicating that the labor market will not soften anytime soon.” While inflation has significantly receded from its peak, he added, it still remains slightly above the Fed’s target.
Kashkari expressed contentment with the Fed’s decision to cut rates by 50 basis points in September, suggesting that a 25 basis point cut at each of the remaining two meetings this year would be a “reasonable starting point.” The Fed is set to announce its next rate decision following meetings on November 6 and 7.
In addition, Kashkari dismissed the notion of China posing a significant economic threat to the U.S., asserting that he does not foresee the yuan replacing the dollar as the global reserve currency. He described recent actions against innovative Chinese companies, including those in AI, as “anti-competitive behavior.” He concluded, “At this moment, I believe we are in a very strong competitive position.”
