Fed’s Waller Expects Tapering to Begin Next Month

The United States Federal Reserve might begin cutting back the massive asset purchases as early as October, Governor Christopher Waller told CNBC in an interview on Monday.

“In my opinion, that’s substantial progress and I think you could be ready to do an announcement in September.”

Waller thinks it all depends on what the next two job reports will show, echoing Chairman Jerome Powell who recently said that developments in the labor market are key in assessing adjustments to monetary policy.

“If they come in as strong as the last one, then I think you’ve made the progress you need. If they don’t, then you’re probably going to have to push things back a couple months.”

“In my view, with tapering we should go early and go fast in order to make sure we’re in position to rate rates in 2022 if we have to.”

“I’m not saying we would, but if we wanted to, we need to have some policy space by the end of the year.”

Speaking of inflation, “My concern is just anecdotal evidence I’m hearing from business contacts, who are saying they’re able to pass prices through. They fully intend to. They’ve got pricing power for the first time in a decade. Those are the sorts of issues that make you concerned that this may not be transitory.”