Investing.com -- Federal Reserve Governor Christopher Waller said today that he will place more weight on another high inflation reading than a lower one when reviewing data published this week.

Waller explained that inflation readings have shown five to six consecutive months of increases. "If I get another higher one, I'm gonna treat that as signal, not noise," he said. On the other hand, if inflation comes down in the next reading, he will need a couple more similar readings to confirm that as a real trend.

The Fed governor noted that the central bank has received persistently better and stronger job reports. He said the unemployment rate, which he described as traditionally the best indicator of the labor market, has been very stable. Waller added that he is not worried about larger revisions to Bureau of Labor Statistics payroll numbers, noting that the agency is getting more responses later in the survey cycle.

On monetary policy tools, Waller stated that now is not the time to use forward guidance. He said that surprising people is not a good idea and that markets should have as much information as possible.

Regarding artificial intelligence, Waller said AI may be affecting financial conditions. He warned that if AI were to pull back, there would be pretty big changes in financial conditions.

On the Federal Reserve's balance sheet, Waller said he sees no reason to ever be in a scarce reserves regime. He noted that if banks don't need as much reserves, there is no problem with shrinking the balance sheet accordingly. A task force will consider how seriously the Fed can think about reducing the balance sheet, though Waller said he has a hard time seeing where the balance sheet at its current size is causing problems.