Fed's Waller Wants 'Several More Months' Of Data Before Policy Shift Debate

• The Federal Reserve needs "several more months of data" to ensure recent weak job growth and high inflation are temporary before considering changes to its ultra-easy monetary policy, Fed Governor Christopher Waller said on Thursday.
• Waller said a "ready-to-rip" economy will eventually work through what he regards as a temporary mismatch between companies' booming demand for workers and the willingness of people on the sidelines of the labor market to take jobs while the coronavirus pandemic is continuing and unemployment benefits are available to pay the bills.
• A higher-than-expected 4.2% jump in consumer prices in the 12 months through April, meanwhile, will prove temporary as supply bottlenecks ease, and consumers spend down a surplus of savings accumulated from the flow of government aid during the pandemic, Waller said at a Global Interdependence Center forum.
• Despite the economic recovery, the country only added 266,000 jobs last month, about a quarter of the gain expected by economists in a Reuters poll. The April inflation and job results were a surprise that led to "the jaw of every forecaster hitting the floor," Waller said and confirmed the need for the U.S. central bank to tie policy changes to outcomes, rather than forecasts that might be off base, particularly coming out of a pandemic.
• Waller said he expects inflation to be above the Fed's 2% target, likely between 2.25% and 2.5%, for the next two years. He said that outcome would be in line with the central bank's effort to allow a period of higher inflation to make up for recent years in which the pace of price increases has lagged.

(Source: Reuters)