The U.S. economy is “ready to rip” but it is still too early to talk about pulling back the central bank’s support for activity, said new Federal Reserve Board Governor Christopher Waller on Friday.
Waller said he expects second-quarter gross domestic product growth to be in the neighborhood of 8% annualized. For the year, the economy could expand at a 6.5% rate, he said.
Over the same period, the unemployment rate should fall to the “low” 5% range while inflation should run at about 2.5% rate.
Waller said he didn’t think this expected strong performance represented a “sugar high” from the massive fiscal stimulus package passed by Congress earlier this year.
“All the fundamentals are there for the good strong growth” that was in place when the pandemic hit last year, he said, in an interview on CNBC.
Asked if it was time to “put the brakes” on the Fed’s easy policy, Waller replied: “There is no reason to be pulling the plug.”
“We’re making up for lost ground,” he said, with more than 8 million jobs still yet to be returned after being eliminated during the pandemic.
“We still have got a long way to go,” Waller said. His comments generally dovetail with Fed Chairman Jerome Powell and other policy officials.
Fed officials will meet in April 27-28 to chart monetary policy for coming months. Economists think the Fed will hold policy steady until later this year.
The Fed has cut interest rates to zero and is buying $120 billion of assets per month to support the economy. The Fed’s balance sheet has hit a record high of $7.79 trillion in the past week.
