Waller, Christopher (1959- )

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    A Fed governor says the latest inflation data reaffirms the case for big rate increases.

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    Christopher J. Waller, one of the Federal Reserve’s governors in Washington, said on Wednesday that recent economic data suggests that the central bank should raise interest rates by more than usual in May, and potentially in June and July as well.“The data has come in exactly to support that type of policy action, if the committee decides to do so,” Mr. Waller said during a CNBC interview on Wednesday, adding that the data may justify “possibly more in June and July.”Fed officials have coalesced around the need to “expeditiously” return policy to a neutral setting, one in which borrowing costs are neither stoking economic growth nor slowing it so much that unemployment rises, as inflation remains stubbornly rapid. Mr. Waller and other officials have made a case for making big rate increases to speed up the process, following the Fed’s decision to increase rates by a quarter of a percentage point in March.Jerome H. Powell, the Fed chair, has signaled that a large rate increase is up for debate, and minutes from the central bank’s last meeting showed that “many” officials would have favored a large increase in March if it hadn’t been for uncertainty created by Russia’s invasion of Ukraine.Mr. Waller suggested that even though inflation might be touching a peak — data this week showed it rising at the fastest pace since 1981, as the war in Ukraine drove gas prices higher and exacerbated already-rapid price increases — it remained “very high,” and the Fed was going to need to keep working to reduce it.It is probably the case that “this is pretty much the peak — it’s going to start coming down,” Mr. Waller said, adding that he had forecast price increases slowing throughout the second part of the year as part of the economic projections he submitted at the Fed’s March meeting. “We’re already seeing some oil prices retreating back.”But Mr. Waller said it was critical to lift rates up to, and even above, neutral to bring down inflation.“Right now, our main concern is getting these prices down, and we can do that without causing a recession,” he said.Markets have heavily penciled in big rate increases in May and June, and investors had marked up the odds of a big move in July over recent weeks. More

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    Digital Currency Is a Divided Issue at the Federal Reserve

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    Officials at the Federal Reserve seem to be increasingly divided over whether it ought to issue a digital dollar — a digital currency that traces straight back to the central bank rather than to the private banking sector.Speeches by several Fed officials show they have yet to align on the issue, even as the Fed’s peers in China, parts of Europe and smaller economies like the Bahamas have created digital currencies or are working toward issuing them. The Fed plans to release a report on the potential costs and benefits of a digital dollar this summer.Lael Brainard, a Fed governor appointed during the Obama administration, made it clear during remarks last week that she envisions a future in which America’s central bank explores and issues a digital currency. But Christopher Waller, her colleague on the Fed’s Board of Governors and a Trump nominee, made it equally obvious during a speech on Thursday that he questions whether that is necessary.“The dollar is very dominant in international payments,” Ms. Brainard said during remarks in Aspen, Colo., adding that she could not imagine a situation in which other countries issue digital currencies and the United States doesn’t have one.“I just, I can’t wrap my head around that,” she said. “That just doesn’t sound like a sustainable future to me.”Mr. Waller, by contrast, suggested that there is little a central bank digital offering could do that the private sector cannot and that the potential benefits of a digital dollar are most likely overstated, while the risks are substantial. He added that the United States need not worry about the U.S. dollar’s being supplanted by China’s digital offering.“I am left with the conclusion that a C.B.D.C. remains a solution in search of a problem,” Mr. Waller said on Thursday, referring to a central bank digital currency. He also voiced concerns that a central bank currency would give the Fed too much information about private citizens.Randal K. Quarles, the Fed’s vice chair for supervision, has also sounded dubious about the need for a central bank digital currency, painting the idea as a passing fad. Jerome H. Powell, the Fed chair, has at times questioned whether such an offering is necessary, but he has more recently stressed that it is important to investigate the idea and has called himself “legitimately undecided.”Supporters of central bank digital currency say it is critical for the United States to stay on top of the technology, even if it is not yet clear what benefits such currencies will offer in practice. Some suggest that a Fed digital dollar could prevent stablecoins — private digital assets backed by a bundle of currencies or other assets — from becoming dominant and creating a big financial stability risk.But opponents worry that a central bank digital currency would not offer benefits that the private sector did not or could not provide and that it might introduce cybersecurity vulnerabilities, issues that Mr. Waller raised Thursday.Commercial banks have also pushed back on the idea, worrying that their consumer banking services will be supplanted by Fed accounts and warning that such a situation would cause them to cut back on their lending. Mr. Waller — despite his overall skepticism — sounded unsympathetic to that argument.“There’s a lot of ways that banks could raise funds,” he said, noting that it might hit bank profit margins but that he wouldn’t have an issue with that. “The whole idea is that if they compete, then the funds don’t flow out, so it could be the case that just the existence of a C.B.D.C. causes fees to go down, deposits to go up.” More

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    The Fed’s newest governor sees America’s inflation pop as temporary.

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    Christopher Waller, the newest governor on the Federal Reserve’s Washington-based board, said on Friday that he expects an unfolding acceleration in inflation — which is expected to intensify in the coming months — will prove short-lived.“I do buy into the idea that this is going to be temporary,” Mr. Waller said on CNBC, during his first television interview since President Donald J. Trump nominated him to the role and the Senate confirmed him. “Whatever temporary surge in inflation we see right now is not going to last.”Inflation data are being measured against very low readings from 12 months ago, causing a mechanical year-on-year jump, he noted. Spending tied to government stimulus and supply chain constraints will also have an effect.“We know the stimulus is going to have some impact, but once the stimulus checks are spent, they’re gone,” Mr. Waller said. “We also know that the bottlenecks that are currently there are going to go away.”The Consumer Price Index, a closely watched inflation measure, rose 2.6 percent in March from a year ago, the Labor Department said earlier this week. But it was skewed by the comparison to March 2020, when prices of some items fell as consumers pulled back spending in the face of the pandemic.While the C.P.I. and other inflation gauges are expected to rise even higher in coming months, Fed officials and most economists project that they will settle back down before long. Many officials see key measures hovering near the central bank’s 2 percent average inflation target by the end of the year.Mr. Waller said that investors themselves are not betting on “outrageous, runaway inflation” and that even if the data show a stronger pickup, the Fed stands ready to contain that and is not going to just let inflation “rip.”“I don’t think anyone would be very comfortable if it got to three, three-plus and stayed there for a while,” Mr. Waller said, noting that the bigger concern would be if inflation expectations jumped. More

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    A Trump Fed Pick Squeaks Through Senate Confirmation

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyA Trump Fed Pick Squeaks Through Senate ConfirmationChristopher Waller will be the fifth Trump pick on the Fed’s seven-member Board of Governors.Christopher Waller was the more conventional of President Trump’s two pending picks for the Fed board; the other has increasingly faint hopes for approval.Credit…Erin Schaff/The New York TimesBy More