WALLER said further rate hikes may be needed to return inflation to the Fed’s 2%
target, but the pace can be flexible, leaving room to pause at the Fed’s October
policy meeting. He said, "If economic data continue to come in as expected, I
expect further hikes to help bring inflation back to 2% more quickly." He added
hikes need not occur at consecutive meetings but should be completed within a
reasonable timeframe. He did not quantify how much higher policy rates must rise
to curb inflation still more than 1 percentage point above the Fed’s target.
WALLER cited a stronger US economy, a lingering energy-price shock from the Iran
war, and AI-driven demand for key goods and services as factors increasing the
need for higher rates.
