WASHINGTON –Several officials from the Federal Reserve have voiced concern about cutting interest rates precipitously or prematurely, given recent data that showed unexpectedly high inflation in January. The sentiment reflects the minutes from the Fed’s most recent meeting, where the majority of officials expressed apprehension about the potential for a resurgence of inflation if rates were cut too rapidly.
Christopher Waller, a member of the Fed’s influential board of governors, advocated for a measured approach, saying there was no rush to begin cutting interest rates. He pointed to the fact that inflation had fallen from a high of 7.1% in 2022 to 2.6% for all of 2023, with prices growing 2% over the second half of the year, aligning with the Fed’s target.
However, Waller also acknowledged January’s surprising figures and the potential that inflation could be more tenacious than anticipated, suggesting patience while more data is collected.
Patrick Harker, president of the Federal Reserve Bank of Philadelphia, also advocated for a cautious approach, warning against expecting immediate rate cuts. Vice Chair Philip Jefferson similarly counselled against excessive easing in response to positive economic news.
Although some Fed officials were unfazed by January’s elevated inflation figures, these statements suggest potential delays or reconsiderations to rate cuts, which many economists had predicted would occur in May or June.