Waller supports no federal funds target change currently

At the recent Federal Open Market Committee (FOMC) meeting, Governor Christopher J. Waller expressed his support for keeping the federal funds target range unchanged. He believes that the current pace of reducing securities holdings should continue. Waller noted that cutting down the Federal Reserve's balance sheet is crucial for normalizing monetary policies. He emphasized the need to lower excessive reserves in the banking system. Currently, reserves are over $3 trillion, which he considers abundant. He stated that there is no sign suggesting that the banking system is nearing an adequate level of reserves. In June 2024, the FOMC had already slowed the pace of redemptions to facilitate a smooth transition to the desired level of securities holdings. Waller thinks this approach remains appropriate. He also mentioned that if unexpected issues arise regarding reserve demand, the Federal Reserve has tools to manage these challenges. Waller suggested that instead of altering the balance sheet reduction pace, the Fed should work on a plan to address any short-term demands for reserves. He believes that good planning is vital to prevent disturbances in markets and for achieving the committee's economic goals.