It’s a good time for the Federal Reserve to “frontload” interest rate hikes because the economy is strong enough to continue growing despite higher borrowing costs, Fed Governor Christopher Waller said on Tuesday.
“This is the time to strike. They want to do this when the economy is strong,” Waller said while speaking before the Minneapolis Fed.
Waller said if the Fed delays rate hikes, the economy could weaken and the unemployment rate could rise.
“From my perspective, do it now, summon it, get it done,” Waller said, and then we can assess how the economy is going,” he said.
The Fed knows the damage that can happen if it’s not serious about curbing inflation, he added.
Waller said the Fed is aiming for a soft landing, where growth can continue despite central bank rate hikes.
Waller said too many people think back to former Fed Chairman Paul Volcker and the early 1980s when the Fed staged a severe recession to curb inflation.
The difference between today and the Volcker era is that inflation has been out of control for nearly a decade, Waller said.
This time inflation has barely been up in a year, “and we’re already on it and we’re not going to pull back,” Waller said.
Several Fed officials spoke on Tuesday. The result is confidence that the economy can avoid a recession, coupled with a determination to raise interest rates by half a percentage point at the next two policy meetings, which would take the Fed’s benchmark rate to 1.75% to 2% in August.
Read: The Fed can cool inflation and sustain economic growth, says Williams
Shares had a roller coaster ride on Tuesday. The tech-heavy Nasdaq index COMP, +1.85%, is up almost 2% in afternoon trading. The yield on 10-year Treasury note TMUBMUSD10Y, 2.986% slipped below 3% in volatile trading.
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