Fed’s Waller channels his inner John Lennon with a plea to ’give disinflation a chance’

Federal Reserve Governor Christopher Waller has urged the U.S. central bank to give inflation a chance to ease during its next policy meeting, suggesting that if data confirms cooling inflation pressures, he would consider keeping interest rates steady. Waller stated that his decision on policy will be heavily influenced by the upcoming August inflation figures.

If inflation continues to decline toward the 2% target, Waller indicated he would be willing to support maintaining the current policy rate. However, he warned that a path to higher interest rates remains an option if inflation remains elevated. Waller emphasized that the current 3.50%-3.75% Fed policy rate is only slightly constraining aggregate demand and that even a modest acceleration in inflation could prompt a rate hike.

He noted that inflation is meaningfully above target but is making slow but steady progress toward the goal. Waller urged patience and suggested waiting to see if inflation improves before taking further action.