Federal Reserve Governor Christopher Waller:
https://www.federalreserve.gov/newsevents/speech/waller20240327a.htm
There is ample evidence that the recent data has also been taken on board by both financial markets and forecasters in adjusting their views of the economic outlook. The markets have pulled back the number of expected rate cuts in 2024. FOMC participants have also adjusted their views on policy in response to recent data and it is reflected in the Summary of Economic Projections. Comparing the December 2023 projections to those just released, one sees that the median number of cuts in the federal funds rate for 2024 is still three, but the dots for 2024 have moved up, meaning at least several policymakers removed one or more cuts from their projection. In fact, the number of policymakers expecting more than three cuts in 2024 decreased significantly, while the number expecting two or fewer increased. I interpret this as showing that the Committee is not over-reacting to the recent data but is not discounting it either.
In my view, it is appropriate to reduce the overall number of rate cuts or push them further into the future in response to the recent data. This reflects the reality of managing an outlook in real time as data comes in. Subsequent data may well alter this outlook again, but we shall see. Based on what we know now, there is no urgency in taking that step.
So where do I see things standing? I see economic output and the labor market showing continued strength, while progress in reducing inflation has slowed. Because of these signs, I see no rush in taking the step of beginning to ease monetary policy. The target range for the federal funds rate has been 5-1/4 to 5-1/2 percent since last July, and I believe that this restrictive level is helping to reduce imbalances in the economy and continuing to put downward pressure on inflation. All indications are that the economy continues to grow at a healthy pace. While retail sales and some other indicators suggest a softening in demand this quarter from the second half of last year, when growth accelerated, the evidence for a significant slowdown is sparse. Meanwhile, as the labor market continues to add jobs at a rapid pace, some signs point to improvement in the imbalance between supply and demand, but others indicate continued tightness.
https://www.federalreserve.gov/newsevents/speech/waller20240327a.htm
There is ample evidence that the recent data has also been taken on board by both financial markets and forecasters in adjusting their views of the economic outlook. The markets have pulled back the number of expected rate cuts in 2024. FOMC participants have also adjusted their views on policy in response to recent data and it is reflected in the Summary of Economic Projections. Comparing the December 2023 projections to those just released, one sees that the median number of cuts in the federal funds rate for 2024 is still three, but the dots for 2024 have moved up, meaning at least several policymakers removed one or more cuts from their projection. In fact, the number of policymakers expecting more than three cuts in 2024 decreased significantly, while the number expecting two or fewer increased. I interpret this as showing that the Committee is not over-reacting to the recent data but is not discounting it either.
In my view, it is appropriate to reduce the overall number of rate cuts or push them further into the future in response to the recent data. This reflects the reality of managing an outlook in real time as data comes in. Subsequent data may well alter this outlook again, but we shall see. Based on what we know now, there is no urgency in taking that step.
So where do I see things standing? I see economic output and the labor market showing continued strength, while progress in reducing inflation has slowed. Because of these signs, I see no rush in taking the step of beginning to ease monetary policy. The target range for the federal funds rate has been 5-1/4 to 5-1/2 percent since last July, and I believe that this restrictive level is helping to reduce imbalances in the economy and continuing to put downward pressure on inflation. All indications are that the economy continues to grow at a healthy pace. While retail sales and some other indicators suggest a softening in demand this quarter from the second half of last year, when growth accelerated, the evidence for a significant slowdown is sparse. Meanwhile, as the labor market continues to add jobs at a rapid pace, some signs point to improvement in the imbalance between supply and demand, but others indicate continued tightness.