christopher j waller : the time has come speech by mr christopher j waller, member of the board of governors of the federal reserve system, at the university of notre dame, notre dame, indiana, 6 september 2024. * * * thank you, eric, and thank you for the opportunity to speak to you today. 1 my topic is the outlook for the u. s. economy and the implications for monetary policy, a set of judgements that have, of course, been influenced by this morning's jobs report. when i scheduled this speech several months ago, i knew it might be challenging to speak a few hours after the release of such an important piece of data. but we like to say that monetary policy must be nimble, so that means policymakers must be nimble also. not simone biles nimble, but nimble. as you will hear, i believe the data we have received this week reinforces the view that there has been continued moderation in the labor market. in light of the considerable and ongoing progress toward the federal open market committee's 2 percent inflation goal, i believe that the balance of risks has shifted toward the employment side of our dual mandate, and that monetary policy needs to adjust accordingly. looking back at the economic data over the first six months of 2024, it portrayed an economy slowly cooling and not showing signs of significant weakening. the labor market had been gradually moderating for the past year or so, and although inflation rose in the first quarter, it then retreated in the second, and there was a widespread view heading into the second half of the year that the fomc was on track to achieve a much desired but unusual " soft landing. " then the july jobs report came in unexpectedly soft. job creation slowed and the unemployment rate increased by two tenths of a percentage point to 4. 3 percent, the highest since october 2021. there was speculation that weather - related issues might have distorted these results and, in fact, the unemployment rate ticked down in this morning's release. but, overall, the august report along with other recent labor data tend to confirm that there has been a continued moderation in the labor market. the ups and downs in the data over time highlight what i consider the right approach to meeting the fomc's dual mandate goals - i believe we should be data dependent, but not overreact to any data point, including the latest data. when we faced a period of banking instability in

problem. there was no economythreatening bubble to pop and no unsustainable boom to bust. the virus is the cause, not the usual suspects — something worth keeping in mind as we respond. today i will briefly discuss the measures taken so far to offset the economic effects of the virus, and the path ahead. governments around the world have responded quickly with measures to support workers who have lost income and businesses that have either closed or seen a sharp drop in activity. the response here in the united states has been particularly swift and forceful. to date, congress has provided roughly $ 2. 9 trillion in fiscal support for households, businesses, health - care providers, and state and local governments — about 14 percent of gross domestic product. while the coronavirus economic shock appears to be the largest on record, the fiscal response has also been the fastest and largest response for any postwar downturn. at the fed, we have also acted with unprecedented speed and force. after rapidly cutting the federal funds rate to close to zero, we took a wide array of additional measures to facilitate the flow of credit in the economy, which can be grouped into four areas. first, outright purchases of treasuries and agency mortgage - backed securities to restore functionality in these critical markets. second, liquidity and funding measures, including discount window measures, 1 / 3 bis central bankers'speeches expanded swap lines with foreign central banks, and several facilities with treasury backing to support smooth functioning in money markets. third, with additional backing from the treasury, facilities to more directly support the flow of credit to households, businesses, and state and local governments. and fourth, temporary regulatory adjustments to encourage and allow banks to expand their balance sheets to support their household and business customers. the fed takes actions such as these only in extraordinary circumstances, like those we face today. for example, our authority to extend credit directly to private nonfinancial businesses and state and local governments exists only in “ unusual and exigent circumstances ” and with the consent of the secretary of the treasury. when this crisis is behind us, we will put these emergency tools away. while the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks. economic forecasts are uncertain in the best of times, and today the virus raises a new set of questions : how quickly and sustainably will it be brought under control? can new