Federal Reserve Gov. Christopher Waller said Thursday (Feb. 24) he is willing to support a half-point interest rate hike at the central bank’s next meeting in March if upcoming data suggests inflation is worsening, according to an Associated Press report.
Waller’s comments, in a speech at the University of California, Santa Barbara, underscore the range of opinion among Fed officials about its next steps.
After Russia invaded Ukraine early Thursday, many economists and investors considered a half-point rate hike much less likely at the March meeting. But Waller only said the invasion’s impact on the U.S. economy “remains to be seen.”
The Fed is looking to increase its benchmark short-term interest rate as inflation surged to 7.5% in January compared with a year earlier, the biggest increase in four decades. A higher rate typically pushes up borrowing costs for mortgages, credit cards, and other consumer and business loans, slowing growth and price increases.
The debate over how quickly to raise interest rates is being closely watched by financial markets and also could have an impact on the broader economy. If the Fed hikes rates too slowly, inflation could remain high and become more difficult to control. But if it lifts borrowing costs too quickly, it could choke off the economy and cause a recession.