WASHINGTON, Oct. 19 (Reuters) – If inflation continues to rise to its current rate over the next few months, rather than decline as expected, US Federal Reserve (Fed) officials may need to adopt a “response more aggressive “next year, said one of its governors on Tuesday.
In remarks to the Stanford Institute for Economic Policy Research, Christopher Waller said he still believes the US economy has gone through the worst of the latest wave of the coronavirus epidemic.
The shortage of manpower and supply problems will, according to him, subside over time, he added, while “the escalation of inflation will be transitory” and prices will return. next year towards the Fed’s target of 2%.
This would mean that any interest rate hike would not take place for “some time,” said Christopher Waller, echoing the view expressed by most of his colleagues at the Fed.
Waiting to raise rates, by the end of 2022 or the end of 2023 according to opinions within the Fed, could give the American economy more time to approach full employment, one of the major objectives of the central bank.
But Christopher Waller felt the risks were changing, saying he was now “greatly concerned” by the assumption that the high pace of price increases would continue. (Report Howard Schneider and Ann Saphir; French version Jean Terzian)
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