Fed Top Official Says Bank May Cut Hike Size, But Not ‘Soften’ Fight Against Inflation

US Federal Reserve Governor Christopher Waller stated on Sunday that the Fed may consider lowering the pace of rate hikes at its next meeting, but that this should not be taken as a “softening” of the Fed’s commitment to lower inflation.

Waller, responding to questions on monetary policy at an economic conference organized by UBS in Australia, said that markets should now focus on the “endpoint” of rate hikes rather than the pace of each move. “It depends on inflation.”

“We’re at a point where we can start thinking maybe of going at a slower pace,” Waller said, but “we’re not softening…Quit paying attention to the pace and start paying attention to where the endpoint is going to be. Until we get inflation down, that endpoint is still a ways out there.”

The Consumer Price Index in October rose 0.4% month-over-month and 7.7% year-over-year, marking the slowest annual increase since January.

Although the report showing lower-than-anticipated inflation in October was “good news,” he warned that it was “just one data point” and would need to be followed by other similar readings to indicate clearly that inflation is dropping.

The Federal Reserve is expected to shift to a half-point rate hike next month and quarter-point hikes after that after raising rates more sharply this year than at any time since the 1980s, including four consecutive 75-basis-point rate hikes that brought the policy rate to a 3.75%-4% range as of early November.