Fed's Waller Says Prior Cuts May Need Reversing, Rejects 150- or 200-Basis-Point Hikes

Fed Gov. Waller said Tuesday, Nov. 10, that policymakers may need to reverse at least three earlier precautionary rate cuts, but are not considering rate increases of 150 or 200 basis points. His remarks set a boundary around the tightening he considers necessary: undo some earlier easing but avoid a much larger jump in rates.

Waller characterized the position as short of an extreme hawkish turn. He said officials do not want to inflict major damage on the economy or cause a sharp downturn. That concern accompanied his call to revisit earlier cuts and his rejection of 150- or 200-basis-point increases.

The comments make clear that Waller sees a possible rollback of prior cuts as distinct from a large rate hike. They also show his emphasis on limiting economic damage while policymakers consider how much earlier easing to reverse. His remarks combine the possibility of undoing prior cuts with a rejection of the much larger rate moves he named.