SAN FRANCISCO, March 31 (Reuters) – U.S. Federal Reserve Governor Christopher Waller on Friday mentioned latest knowledge is per the notion that the U.S. central financial institution might be able to drive down inflation with out critical hurt to the labor market.
If individuals actually have begun to consider that costs are going to only carry on rising, then defeating excessive inflation may require dramatic actions by the Fed to puncture these expectations, Waller mentioned in remarks ready for an instructional convention on the San Francisco Fed.
Dramatic Fed charge hikes may sluggish the financial system abruptly and result in massive job losses.
But when what’s driving increased costs is a sudden rise within the frequency at which companies reset their costs — a idea for which Waller mentioned there’s some proof — then “inflation could be introduced down shortly with comparatively little ache by way of increased unemployment,” he mentioned. “Latest knowledge are per this story.”
Extra knowledge can be wanted to determine “which story is correct,” he mentioned.
Reporting by Ann Saphir; Modifying by Sandra Maler
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