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By Christopher Rugaber<\/div><\/div>\n

While the Fed isn\u2019t done hiking interest rates, there\u2019s a growing chance that future escalations will be lower than the 3\/4-point increase posted after recent meetings.<\/span><\/span><\/p>\n<\/div>\n

WASHINGTON (AP) \u2013 Christopher Waller, a key Federal Reserve official, added his voice Wednesday to a rising number of Fed officials who have suggested that the central bank will likely slow the pace of its interest rate hikes beginning in December.<\/span><\/span><\/p>\n

Waller, a member of the Fed\u2019s Board of Governors, said he was open to raising the Fed\u2019s key rate by a half-point next month in light of evidence that inflation may be cooling.<\/span><\/span><\/p>\n

At each of its four most recent policy meetings, the central bank has raised its benchmark rate by an aggressive three-quarters of a point. The cumulative effect has been to make many consumer and business loans costlier and to raise the risk of a recession.<\/span><\/span><\/p>\n

At the same time, Waller stressed that inflation remains painfully high. And he cautioned that there have been occasions in the past when economists thought inflation was falling only to see prices reverse course and accelerate again.<\/span><\/span><\/p>\n

\u201cThe data of the past few weeks have made me more comfortable considering stepping down to a (half-point) hike,\u201d Waller said in a speech in Phoenix. \u201cIt is important to remember that this would still be a very significant tightening action.\u201d<\/span><\/span><\/p>\n

The Fed has raised its key short-term rate this year at its fastest pace since the early 1980s \u2013 to a range between 3.75% and 4%, the highest level in about 15 years.<\/span><\/span><\/p>\n

Those hikes have increased borrowing costs for mortgages, auto loans and credit cards, among other loans. Fed officials intend the higher rates to slow borrowing and spending and cool inflation pressures.<\/span><\/span><\/p>\n

Waller\u2019s remarks followed comments earlier Wednesday from Mary Daly, president of the Federal Reserve Bank of San Francisco. Daly said in an interview with CNBC that the Fed will likely raise its short-term rate at least a full percentage point above its current level.<\/span><\/span><\/p>\n

She also said there has so far been no discussion among Fed officials about whether to pause their rate hikes if inflation continued to moderate.<\/span><\/span><\/p>\n

\u201cPausing,\u201d Daly said, \u201cis off the table right now \u2013 it\u2019s not even part of the discussion.\u201d<\/span><\/span><\/p>\n

Both Waller and Daly took pains, like Chair Jerome Powell at a news conference this month, to emphasize that rates will ultimately go higher even as the Fed raises them in smaller increments. Waller also underscored his view that the inflation report for October, which showed slower price increases, was just one data point and not necessarily solid evidence that inflation is declining.<\/span><\/span><\/p>\n

\u201cI cannot emphasize enough that one report does not make a trend,\u201d he said. \u201cIt is way too early to conclude that inflation is headed sustainably down.\u201d<\/span><\/span><\/p>\n

Waller noted that inflation had shown signs of slowing late last year before heading higher again.<\/span><\/span><\/p>\n

\u201cI will not be head-faked by one report and will continue to watch the data between now and the December (Fed) meeting,\u201d he said.<\/span><\/span><\/p>\n

On Monday, Lael Brainard, the Fed\u2019s vice chair, said a smaller rate increase \u201cwill probably be appropriate, soon.\u201d<\/span><\/span><\/p>\n

Market traders now foresee an 85% likelihood of a half-point rate increase at the Fed\u2019s mid-December meeting, according to the CME Group\u2019s tracking of investor expectations.<\/span><\/span><\/p>\n

Some of Waller\u2019s comments about rate hikes Wednesday were harder-line than Brainard\u2019s were. In response to a question, for example, Waller said that the current unemployment rate \u2013 at 3.7%, it is near a 53-year low \u2013 means the Fed can focus primarily on fighting inflation. \u201cWe are not seeing the typical trade-off between \u2026 driving down inflation and causing all these job losses and high unemployment,\u201d he said.<\/span><\/span><\/p>\n

Waller noted that even while the Fed has sharply raised its key short-term rate, employers are still hiring at a healthy clip.<\/span><\/span><\/p>\n

As a result, he said, the Fed should \u201ctackle inflation \u2026 the job market is giving this to you. Don\u2019t be cautious, don\u2019t be afraid.\u201d<\/span><\/span><\/p>\n

In her remarks, though, Brainard suggested that the Fed\u2019s key rate is already high enough to restrain the economy. As it moves higher, the central bank should increasingly consider the risk that the economy might tumble into a recession, she said.<\/span><\/span><\/p>\n

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\nAuthor: kerrys<\/p>\n","protected":false},"excerpt":{"rendered":"