Federal Reserve Board member Christopher Waller said on Monday that the future rate cut is expected to be less than the significant rate cut in September. He believes that the U.S. economic growth rate may still be higher than expected.

Waller cited recently released reports on employment, inflation, Gross Domestic Product (GDP), and income, pointing out "these data suggest that the extent of economic slowdown may not be as large as expected."

"While we do not want to overreact or overinterpret these data, I believe that the overall data suggest that monetary policy should be more cautious in the pace of rate cuts than it was at the September meeting," Waller said in prepared remarks for a conference at Stanford University.

Recently released US economic data has been mixed. The labor market unexpectedly strengthened in September after weakening in the summer, Consumer Price Index (CPI) inflation indicators slightly exceeded expectations, and GDP remained strong.

Recently, the US Department of Commerce also revised the growth rate of the second quarter Gross Domestic Income (GDI) to 3.4%, an upward revision of 2.1 percentage points from the previous estimate, bringing it closer to GDP growth. The savings rate was also significantly revised up to 5.2%.

Waller said: "These revisions indicate that the economy is much stronger than previously expected, and there is little sign of a significant slowdown in economic activity."

Calling for gradual rate cuts in the next year.

The Federal Reserve took unprecedented measures at its September meeting, significantly lowering the benchmark interest rate by 50 basis points to a target range of 4.75% - 5.00%. In the past, the Federal Reserve only did this during crises, as the central bank tends to adjust rates by 25 basis points.

Federal Reserve officials also stated that they may cut rates by another 50 basis points at the final two meetings in 2024, and cut rates by another 100 basis points in 2025. However, Powell did not commit to a specific rate-cutting path for the future.

"Whatever happens in the near future, my baseline remains to gradually reduce the policy rate in the next year," he said.

The market had previously expected the Federal Reserve to continue cutting rates by 50 basis points in November. However, with strong U.S. nonfarm payroll data in September and higher-than-expected CPI in September, investors are currently betting on a 25 basis point rate cut by policymakers at that time.

According to the Federal Reserve observation tool at the Chicago Mercantile Exchange, traders currently estimate an 86.5% likelihood of a 25 basis point rate cut in November, with a 13.5% probability of no rate cut and a 0% chance of a 50 basis point cut.

Minneapolis Federal Reserve President Kashkari also indicated on Monday that continuing moderate rate cuts over the next few quarters may be appropriate.

Editor/Rocky