"But if the real economy continues showing underlying strength and inflation appears to stabilize or reaccelerate, more policy tightening is likely needed despite the recent run up in longer-term rates."
The Fed drove its policy rate up aggressively last year to bring inflation down from 40-year highs, and this year there has been clear progress on reducing price pressures, even as the job market has remained strong, Waller said in his remarks.
"The data in the past few months has been overwhelmingly positive for both of the FOMC’s goals of maximum employment and stable prices," he said.
If the economy slows, "we can hold the policy rate steady and let the economy evolve in the desired manner," he said.
But if demand and economic activity continue at their recent pace, that could put upward pressure on inflation, and "more action would be needed on the policy rate to ensure that inflation moves back to target and expectations remain anchored."
Persons:
Christopher Waller, Waller, Ann Saphir, Andrea Ricci
Organizations:
Federal, European Economics & Financial, Fed, Thomson
Locations:
U.S, London