Federal Reserve President Christopher Waller detailed his readiness to raise rates by 50 bps until the extreme inflationary pressures plaguing the US economy subside. Waller stressed that until inflation subsides, there is “no point in stopping” a 50 bps rate hike. Furthermore, U.S. Bureau of Economic Analysis statistics show that U.S. savings have plunged to levels not seen since the “Great Recession” of 2008.
Christopher Waller has advocated a 50 bps rate hike at every Fed meeting until inflation is under control
Inflation is taking a heavy toll on the wallets of everyday Americans as the cost of goods and services have skyrocketed in the past few months. Inflation is so bad that President Joe Biden is scheduled to hold arare presidential meetingwith Federal Reserve Chairman Jerome Powell on May 31 to discuss inflation and the state of the US economy. Meanwhile, Federal Reserve President Christopher Waller has expressed hisopinionthat a 50 bps increase in the benchmark interest rate
at each meeting is necessary to stave off inflation.
Waller explained his views when he spoke at the Institute for Financial Stability in Frankfurt, Germany. Waller further elaborated that he is positive that the labor market can cope with rising interest rates without spurring a rise in unemployment. If we can keep the unemployment rate at 4.25%, I think that’s an impressive performance,” Wallersaid in his speech. Waller said that he envisions the Fed raising rates by 50 bps all the way until inflation settles down. Waller opined that.
I advocate a 50 (basis point hike) at every meeting until we see a significant drop in inflation. Until we get that, I don’t see the point in stopping.
Waller stressed that eventually the Fed’s monetary policy will show results and show how things are working.” “Over a longer period of time,” he noted in his speech, “we will learn more about how monetary policy affects demand and how supply constraints are evolving.” If the data suggest that inflation is stubbornly high, I am prepared to do more.”
Waller thinks 2% annual inflation is still achievable – Peter Schiff says savings data from the Bureau of Economic Analysis show the U.S. economy is not healthy
Under the circumstances, the Fed seems to believe that it can go well beyond neutral and sincerely believes that the central bank can lower its benchmark interest rate to 2%. Said Waller, “In particular, we are not going to forgo a 50 basis point hike until inflation is closer to our 2% target.” And, he said, “I support bringing the policy rate above neutral by the end of this year, thereby reducing demand for products and labor, bringing it more in line with supply, and thus helping to contain inflation.
Gold bug and economist Peter Schiff, on the other hand, does not have much hope that the Fed will do its job and does not believe in Jerome Powell’s strong balance sheet argument. Schiff brought up the fact that Americans are cutting into their savings to cope with a difficult economy. The U.S. Bureau of Economic Analysis has released data showing that U.S. personal savings have fallen to their lowest level since September 2008.
“If the U.S. economy and household balance sheets are as strong as
Powell claimsto be, Schiff said. Schiff said. ‘Why has the savings rate plunged to its lowest level since the middle of the worst recession since the Great Depression?’ Because, “In tough times, people take advantage of their ample savings.
What do you think about Federal Reserve President Christopher Waller’s opinion? What do you think about the latest U.S. savings data and Peter Schiff’s comments? Let us know what you think about this subject in the comments section below.
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