In prepared remarks, Waller said that strong recent U.S. growth and jobs data suggested to him that the U.S. central bank still needs to verify that progress is being made in its ongoing drive to cool price pressures. For that reason, Waller added that he sees “no rush” to start bringing rates down from more than two-decade highs.
“[T]he risk of waiting a little longer to ease policy is lower than the risk of acting too soon and possibly halting or reversing the progress we’ve made on inflation,” Waller said.
Citing Waller’s statements, the Goldman Sachs analysts said that a previously anticipated rate cut in May was “unlikely,” according to a note quoted by media outlets. They are also now forecasting four 25 basis-point reductions this year, down from the six originally implied in the Fed’s projections in December.
Earlier this week, minutes from the Fed’s January gathering showed that policymakers were worried about slashing interest rates too soon, and instead wanted to have “greater confidence” that inflation was cooling back down towards their 2% target.
According to the closely-watched FedWatch Tool from CME Group (NASDAQ:CME), markets now expect the Fed to roll out its first 25 basis-point cut in June.
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