Governor Waller speaks, Treasury response

After getting markets really excited on November 28^th, 2023 when Fed Governor Chris Waller said “for several more months – I don’t know how long that might be – three months, four months, five months – that we feel confident that inflation is really down and on its way, you could then start lowering the policy rate just because inflation is lower. It has nothing to do with trying to save the economy or recession,” today he said that while inflation has further moderated, “concerns about the sustainability of these data trends requires changes in the path of policy to be carefully calibrated and not rushed.” There is that word again, ‘sustainability’ that I keep harping on.

He is confident though “that the economy can continue along its current trajectory.” When will ‘sustainability’ be achieved with inflation at 2%? “I think we are close, but I will need more information in the coming months confirming or (conceivably) challenging the notion that inflation is moving down sustainably toward our inflation goal.”