The governor of the Federal Reserve Christopher Waller speaks at the annual conference of Clearing House in New York on November 12, 2024.
Brendan McDermid | Reuters
The governor of the federal reserve, Christopher Waller, said on Monday that he expected that the effects of President Donald Trump's prices were “transient”, adopting a term that caused the central bank in difficulty during the last inflation fight.
“I can already hear the howls that it must be a mistake given what happened in 2021 and 2022. But it is not because it did not work once you should never think in this way,” said Waller in the remarks for a political speech in Saint-Louis who compared his vision of inflation to the controversial football game “Tash Push”.
Presenting two scenarios for what tasks will look like, Waller said that Waller said that larger and more sustainable prices would lead to an increase in larger inflation initially to a 4% to 5% range that would eventually reflect as growth slowed down and unemployment increased. In the smaller scenario, inflation would reach around 3% and then fall.
Both cases would always see Fed reducing interest rates, timing being the only question, he said. Stronger prices could force a reduction to support growth, while smaller tasks could allow “good news” later this year, added Waller.
“Yes, I say that I expect a high inflation to be temporary, and” temporary “is another word for the transitional” “, he said.” Despite the fact that the last wave of inflation from 2021 lasted longer than me and other planned political decision-makers, my best judgment is that the higher inflation of prices will be temporary. “
The term “transitional” brings back to the cutting edge of inflation in 2021 which fueled managers and many economists who should attenuate after the supply chain and the demand for factors linked to the normalized COVVI-19 pandemic.
However, prices have continued to increase, hitting their highest since the early 1980s and requiring a series of spectacular rate increases. Although inflation has been considerably withdrawn since the Fed began to increase in 2022, it remains above the 2% target of the central bank. The Fed reduced its reference loan rate from a full point at the end of 2024, but has not reduced this year.
Born named by Trump during the president's first term, Waller used a football analogy to explain his point of view on “transient” inflation. He cited the famous “Tash Push” game of the Philadelphia Eagles that the team used with a great effect on short-yard and goal line situations.
“You are the Eagles of Philadelphia and it is fourth and a few centimeters from the goal line. You call the Tash push but do not manage to convert by performing the ball,” he said. “Since it did not work as you waited, does it mean that you should not ask TUSH's thrust the next time you are faced with a similar situation? I don't think.”
Waller estimated that Trump has one of the two tariffs: keeping the samples raised and remaking the economy, or using them as negotiation tactics. In the first case, he sees growth slow down “to a ramp” while the unemployment rate increases “considerably”. If the prices are negotiated, it sees the effect on inflation as “significantly lower”.
In the other case, he said that “one of the greatest shocks to affect the American economy for many decades” is to make forecasts and the development of policies difficult. Fed officials will have to “remain flexible” to decide the future path.
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