Take a Rate-Hike Pause: Two Fed Officials Say to Give Disinflation a Chance

Federal Reserve Governor Christopher Waller is urging policymakers to give falling inflation more time before raising interest rates again. If August data show that price pressures are continuing to ease, he said he would favor leaving the policy rate unchanged at this month’s meeting.

The August inflation figures will be the last major price report released before the Federal Reserve gathers. Waller called the data critical and said he would support holding rates steady if inflation continues moving toward the Fed’s 2% target.

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Give disinflation a chance.

Borrowing from John Lennon’s song “Give Peace a Chance,” Waller said, “Give disinflation a chance.” He warned against raising rates too early, arguing that the cooling process should be allowed to develop fully. He stressed that he was not proposing a wait until next year, but rather a period of observation to see whether conditions improve.

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If it continues moving toward our 2% goal, then I am willing to support keeping the policy rate at its current level.

Waller acknowledged that inflation remains well above the Fed’s 2% goal. But he said it is “slowly continuing to move” toward that level. If inflation remains persistently hot, he added, he would consider another rate increase.

New York Fed President John Williams expressed a similar view a day earlier, pushing back against speculation that the Fed would raise rates soon. “Recent data are encouraging,” Williams said, adding that he saw inflation declining gradually as some tariff effects faded. He said the previous policy decision had left interest rates at a level that balanced the Fed’s dual responsibilities of maximum employment and price stability, while officials continued gathering data and reassessing the appropriate rate level.

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Recent data are encouraging. I do see a trend of inflation slowly coming down as some of the tariff effects wear off.