Fed Governor Christopher Waller today said that inflation is not accelerating, and his dovish-assessment is based on the most recently published monthly Price Indices. Mr. Waller said that the current monetary policy is at an appropriate level to keep inflation from resurging, and added that Employment data is the critical factor that will need to soften prior to the FOMC dropping their critical overnight rate.
As of the first of this month, the Unemployment Rate had ticked up 1/10% to 3.9%. Governor Waller insinuated that rate would need to rise 0.2%-0.3% more to have just cause to lower interest rates. That’s not a huge change from current levels, but the last time Unemployment was that high was in November 2021 on the way down from Covid record highs.
Here’s my take on the sitch as an armchair economist: Delaying action until lagging indicators begin to change is the reason we have huge economic cycles. Here’s the historical Unemployment Rate over the last 70 years. You’ll note that when the Unemployment Rate begins to rise from the lows, a recession (gray bar) sets in.
I’m not being critical. Heaven knows I’m glad I’m not a regulator. Just an observer of data, and a ponderer of solutions.
