Fed’s Waller: Economic data gives Fed space to hike further

According to prepared remarks for delivery at a conference sponsored by The Money Marketeers of New York University, Federal Reserve Governor Christopher Waller has expressed his support for hiking rates at the July FOMC meeting.

The decision-maker also demonstrated his reluctance to declare US inflation under control and supported further rate increases this year. Following the original remarks noted above, Reuters published additional remarks that appeared to support the notion that Waller, a Fed official, is raising concerns about a “soft landing” while praising the US central bank’s efforts to control inflation. In spite of this, the policymaker claims that rate increases have mostly hurt the job market and the economy.

Fed’s Waller also suggests that two more softer prints of the Consumer Price Index (CPI) can flag the policy pivot while also adding that September meeting is a live monetary policy meeting.

“The robust strength of the labor market and the solid overall performance of the U.S. economy gives us room to tighten policy further,” said Fed’s Waller.

Fed’s Waller cited example of 2021 summers, when the inflation briefly slowed before getting much worse, to tame the fears emanating from this week’s downbeat US inflation clues.

Additional Comments

Fed likely to need two more 25 basis point rate hikes this year.

Banking sector is strong and resilient.

Bulk of past rate hikes already have impacted economy.

It is worth noting that the aforementioned headlines join the early-Asian session consolidation to allow the US Dollar to take a breather. That said, the US Dollar Index (DXY) licks its wounds near the lowest levels since since April 2022 the previous day, down 2.45% on a week so far, as downbeat inflation clues from the US push back the Federal Reserve (Fed) hawks.