WASHINGTON (Reuters) – The Federal Reserve needs “several more months of data” before considering changes to its open monetary policy to ensure that recent weak job growth and high inflation provide something temporary, the governor of the Federal Reserve said on Thursday. Christopher Waller entity.
He also indicated that an economy “ready to take off” will end up overcoming what he considers to be a temporary “mismatch” between the growing demand for workers by companies and the willingness of people to accept jobs while the pandemic continues and benefits for unemployment can pay the bills.
In his view, the 4.2% annual increase in consumer prices in April, higher than expected, will be temporary as bottlenecks are alleviated and consumers spend a surplus of savings accumulated by the flow of government funding during the pandemic, Waller said.
“The US economy is stepping on the gas and continues to rebound very strongly,” Waller said.
Still, April inflation and the labor report came as a surprise that caused “the jaws of all forecasters to drop,” Waller said, while confirming the need for the Fed to base its policy changes on results, not in the forecasts that come to light in the context of a pandemic and could be wrong.
The Fed has said that it will not change its $ 120 billion in monthly bond purchases until there is “further substantial progress” and people are back at work, even with a possible increase in interest rates from its current level close to zero.
It also wants to push inflation above 2% for some time to make up for past weak inflation, and has vowed not to overreact to short-term price jumps that may be underway.
The May and June labor reports “could reveal that April was an outlier, but we need to look at that before we start thinking about adjusting our policy stance,” Waller said. “Now is the time to be patient, steel-eyed central bankers, and not be fooled by temporary data surprises.”
(Reporting by Howard Schneider; edited in Spanish by Carlos Serrano)