Waller: If inflation continues to fall over the next three to five months, the Fed will cut rates

Federal Reserve Governor Christopher Waller said he is encouraged by the recent slowdown in economic activity, which may indicate that the central bank's policy is restrictive enough to bring inflation, which remains too high, under control.

In his speech on Tuesday, Waller said, "I am becoming more confident that policy is currently well-positioned to slow the economy and get inflation back to 2 percent, and I am also reasonably confident that it can do so without a sharp increase in the unemployment rate, which is currently at 3.9 percent."

Waller added, "If the decline in inflation continues, 'for a few more months... three months, four months, five months... we could start lowering the policy rate just because inflation is lower. This has nothing to do with trying to save the economy. This is consistent with every policy rule. There is no reason to say that we will keep it really high.'"

Policymakers left interest rates unchanged at a 22-year high for the second consecutive meeting earlier this month. Recent economic reports have supported the claims of Fed watchers that the central bank has stopped raising interest rates.