Christopher Waller, Speech: The Inflation Rate for Necessities, A Look at Food, Energy and Shelter Inflation

Fed Funds

“The big picture is that the U.S. economy is adjusting well so far to the higher interest rates that are necessary to rein in inflation. But inflation remains quite elevated, and so more needs to be done. Although economic activity slowed in 2022, I expect the Fed will need to keep a tight stance of monetary policy for some time to slow activity further in 2023.”

“Our intention is to tighten financial conditions, including raising the cost of credit, to dampen demand and spending to further reduce inflation.”

“Fortunately, there are signs that food, energy, and shelter prices will moderate this year. An important factor has been the Federal Reserve’s ongoing fight to lower inflation through tighter monetary policy. We are seeing that effort begin to pay off, but we have farther to go. And, it might be a long fight, with interest rates higher for longer than some are currently expecting.”

Inflation

“Some believe that inflation will come down quite quickly this year. That would be a welcome outcome. But I’m not seeing signals of this quick decline in the economic data, and I am prepared for a longer fight to get inflation down to our target.”

Growth, Jobs, Inflation

“It looks as though economic activity may be moderating further in the first quarter of 2023, but I expect the U.S. economy to continue growing at a modest pace this year, supported by a strong labor market and by encouraging progress in lowering inflation.”