Federal Reserve Bank of Kansas City Speech: Economic Outlook and Monetary Policy Review for 2024
Federal Reserve Bank of Kansas City President, Chris Waller, recently delivered a speech discussing the economic outlook for the remainder of 2024. Waller highlighted the challenges faced by economic forecasters and monetary policymakers in the first half of the year, with inflation rising unexpectedly in the first quarter. However, recent data suggests a return to progress towards the Federal Open Market Committee’s price-stability goal.
Waller emphasized the importance of central bank communication in guiding policy decisions, comparing it to planning alternative routes for a commute based on traffic conditions. He stressed the need for policymakers to consider various scenarios and communicate potential policy paths to the public.
In terms of economic activity, Waller noted a moderation in growth in the second quarter, with GDP estimates showing a slight increase. However, the Institute for Supply Management’s survey indicated a contraction in activity among non-manufacturing firms, raising concerns about the pace of economic expansion.
On the labor market front, Waller highlighted a balance between supply and demand, with improvements in labor force participation and immigration helping to meet demand for workers. Wage growth has slowed, indicating a more stable labor market environment.
Regarding inflation, Waller expressed confidence in progress towards the 2 percent goal, citing recent data showing a decline in consumer prices. He outlined three possible scenarios for inflation in the second half of the year, ranging from optimistic to pessimistic, and emphasized the need for data-dependent policy decisions.
Overall, Waller’s speech underscored the importance of monitoring economic data closely to determine the appropriate stance of monetary policy. As the economy continues to evolve, policymakers will need to remain flexible and responsive to changing conditions.
