by Howard Schneider and Ann Saphir

WASHINGTON (Reuters) – Christopher Waller, one of the governors of the American Federal Reserve (Fed), said on Tuesday he was “increasingly confident” that the current level of interest rates of the American central bank will be sufficient to bring inflation back to the 2% target and did not rule out a drop in the cost of credit in the months to come.

“I am increasingly convinced that monetary policy is currently well positioned to slow the economy and bring inflation back to 2%,” he said in a document prepared for an intervention before the group think tank American Enterprise Institute.

Christopher Waller also raised the possibility of a reduction in the Fed’s key rates if inflation continues to fall.

“If we see disinflation continuing for several more months – I don’t know how long it could last, three months, four months, five months – (…) that we are convinced that inflation is actually falling and on track, we could then start to lower the policy rate simply because inflation is lower,” he said.

“This has nothing to do with trying to save the economy or (avoid) recession,” he added.

The Fed kept the federal funds rate range unchanged at its last meeting, at 5.25%-5.5%.

Analysts almost certainly expect the same to happen at the next meeting on December 12 and 13.

(Report by Howard Schneider and Ann Saphir, by Claude Chendjou, edited by Jean-Stéphane Brosse)

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