Frankfurt - Federal Reserve Governor Christopher Waller said Friday that the Fed should remove any suggestion of an easing bias from its policy statement, arguing the change would make clear that a rate cut is no more likely than a rate increase. Waller delivered the remarks at an economic forum in Frankfurt, Germany, and emphasized the need to maintain the current policy rate until inflation shows unmistakable signs of moving back toward the Fed's 2% objective.
Waller highlighted recent inflation readings, noting that the Fed's preferred inflation measure reached 3.8% in April. "Inflation is not headed in the right direction," he said in prepared remarks. He added that excising the easing-bias language would help signal that the next adjustment - whether a hike or a cut - will be driven strictly by incoming data, not by a predisposition in the statement.
Once a proponent of lower rates, Waller said his stance has shifted amid signs that inflation may be becoming more persistent and spreading more broadly across goods and services. "I would support removing the 'easing bias' language in our policy statement to make it clear that a rate cut is no more likely in the future than a rate increase," he said. He reiterated that "the next move, whether it is a hike or cut, will depend on the data," and that deleting language about the extent and timing of further adjustments would reinforce that point.
Waller said he does not expect to back a change in the policy rate in the near term. He also stressed that the eventual path of policy will hinge importantly on the duration of the conflict in Iran, describing that development as a material influence on outcomes. On the labor market, the governor said conditions are balanced and that labor-market tightness is no longer the central determinant of policy direction.
Waller expressed concern about rising inflation expectations as the Fed misses its 2% target into a sixth year. He warned that if expectations become unanchored, he would be prepared to support a rate increase. He also observed that elevated energy costs have not damped consumer spending and that there is no evidence the current wave of investment in artificial intelligence will slow.
Waller's remarks come as pressure mounts on incoming Fed Chair Kevin Warsh to take a more hawkish stance at the June policy meeting.
Clear takeaway: Waller wants the Fed to remove language suggesting an easing bias from its policy communications and to keep rates steady until inflation moves clearly toward 2%, while reserving the right to act if inflation expectations become unanchored or external shocks such as the Iran conflict alter the outlook.