Fed official eyes a full-point hike
Federal Reserve Gov. Christopher Waller indicated Thursday that he is open to a historically steep interest rate hike, calling the whopping 9.1% inflation reading for June a “major-league disappointment.”
Waller said he is in favor of another three-quarter percentage point hike when Fed officials meet on July 26 — but added that he could back a full-percentage-point hike if data suggests it is needed to tame decades-high inflation.
“We have important data releases on retail sales and housing coming in before the July meeting. If that data come in materially stronger than expected, it would make me lean towards a larger hike at the July meeting to the extent it shows demand is not slowing down fast enough to get inflation down,” Waller said in remarks at the Rocky Mountain Economic Summit.
A full-point rate hike would mark the first time the modern Fed has ever pulled that lever. The central bank hasn’t enacted a hike of that size since it began using overnight interest rates to guide policy in the early 1990s.
Waller provided guidance in response to a June Consumer Price Index report that he described as a “major-league disappointment.” The 9.1% increase was the sharpest uptick since November 1981, adding renewed urgency to the Fed’s mission to achieve price stability.
Also Thursday, Treasury Secretary Janet Yellen admitted inflation is “unacceptably high” in her first public comments since the data release.
She signaled her support for the Federal Reserve to aggressively hike interest rates.
“We’re first and foremost supportive of the Fed’s efforts — what they see, deemed to be necessary to get inflation under control,” Yellen said during a speech in Bali, Indonesia.
If [retail sales and housing] come in materially stronger than expected, it would make me lean towards a larger hike at the July meeting. — Federal Reserve Governor Christopher Waller