Christopher Waller Federal Reserve Governor said on May 10 that it is time to “hit it” on surging interest rates to tackle inflation that is too high and a labor market, with almost two job vacancies for every job seeker, that is “out of whack”
Waller told the Economic Club of Minnesota:
“It’s time to raise rates now when the economy can take it. Front-load it, get it done, and then we can judge how the economy is proceeding later, and if we have to do more, we’re going to do more.”
The U.S central bank lifted interest rates by 0.5% last week and Fed Chair Jerome Powell implied that similar-sized rate hikes were likely at the upcoming two policy meetings.
Waller was asked why the Fed is hesitant on raising rates much faster if inflation is as high as it is.
“It’s not a shock-and-awe Volcker moment,” Waller said, referring to former Fed Chair Paul Volcker, whose fight with inflation in the early 1980s entailed high and unforeseen rate hikes of as much as 4% at a time, and sent the economy into a steep recession.
At that time, inflation had been intensifying for years and the financial and public markets had little faith in the Fed’s ability to curb it. The latest streak of inflation has only remained too high for roughly a year, he said. Waller concluded:
“We are on it already, and there’s no backing off. And the other advantage is the labor market, as I said, is so strong, the economy is doing so well, this is the time to hit it.”