FED WALLER: THE INTEREST RATE INCREASE IN SEPTEMBER WILL DEPEND HEAVILY ON THE AUGUST CPI

ON 3 SEPTEMBER, FEDERAL RESERVE GOVERNOR WALLER STATED THAT HIS NEXT INTEREST RATE DECISION WOULD “RELATIVELY DEPEND” ON THE AUGUST INFLATION DATA PUBLISHED NEXT WEEK, AND THAT A DEGREE OF WARMING IN THE INFLATION DATA ALONE COULD PROMPT HIM TO TURN TO SUPPORT THE FED'S INTEREST RATE HIKE AT THE UPCOMING POLICY MEETING. HE SAID: “IF WE CONTINUE TO MAKE PROGRESS TOWARDS THE 2 PER CENT TARGET, THEN I WOULD BE WILLING TO SUPPORT MAINTAINING POLICY INTEREST RATES AT THE CURRENT LEVEL. BUT IF INFLATION FIGURES ARE HIGHER THAN EXPECTED, I WILL CONSIDER A HIGHER INTEREST RATE.” WALLER DESCRIBED THE CURRENT POLICY AS A SLIGHT DISINCENTIVE TO ECONOMIC GROWTH, ADDING THAT “THE ACCELERATION OF INFLATION MAY NOT PROMPT ME TO SUPPORT THE TIGHTENING OF THE POLICY. IF THERE IS EVIDENCE IN AUGUST OF A REVERSAL IN THE MOMENTUM TOWARDS THE 2 PER CENT TARGET OF INFLATION, A SMALL ADJUSTMENT TO OUR POLICY POSITION WILL HELP TO ENSURE THAT INFLATION RETURNS.” HE ALSO SAID: “ALTHOUGH THE INFLATION RATE IS STILL WELL ABOVE THE TARGET OF 2 PER CENT FOR FOMC, RECENT DATA SHOW THAT WE HAVE FINALLY SEEN SOME SIGNS OF INFLATION COOLING.”