A Federal Reserve official predicted quarter point rate cuts if data looked ‘fine’. But he also set out a scenario for a pause — or faster reductions.A Federal Reserve official has predicted that there may be quarter point rate cuts if the data continues to look “fine.” However, he also outlined a scenario where there could be a pause or even faster reductions in interest rates.

After making their first interest rate cut in over four years this week, Federal Reserve officials are keeping their options open as they determine the pace at which they will lower borrowing costs in the coming months.

In a recent CNBC interview, Fed governor Christopher J. Waller suggested that if the data remains positive, the Fed could lower interest rates in standard quarter-point increments. However, if inflation were to increase, the Fed may choose to keep rates steady.

On the other hand, if the job market weakens more than expected or if inflation is lower than anticipated, the Fed could opt for more rapid rate cuts.

Waller stated that if the data continues to come in soft, he would be willing to be “aggressive” in cutting rates in order to bring inflation closer to the Fed’s target of 2 percent.

This shift towards a more proactive approach to lowering borrowing costs has surprised many economists, who had not expected such a swift change in direction just a month or two ago. The Fed’s decision to cut rates by a larger-than-usual half point this week has also raised questions about the possibility of other significant rate cuts in the future.

Waller’s comments provide insight into the Fed’s thought process at this critical time. As policymakers work towards bringing interest rates back to a more normal level, they are faced with the challenge of determining the appropriate pace for doing so.

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