Bonds & Rates
Home›Bonds & Rates›Central Banks›Fed’s Waller signals leaning toward September hold on…
Fed’s Waller signals leaning toward September hold on rates
Waller said his decision would be heavily influenced by August inflation and added that a hot print could put a rate hike back on the table.
Fed Governor Christopher Waller said he is leaning toward keeping the federal funds rate unchanged at the September 15 to 16 FOMC meeting, provided recent disinflation continues.
Speaking at Reuters NEXT Newsmaker Interview in Washington, Waller said that if the disinflation trend shows up in incoming data over the next two weeks, he would be inclined to support a hold. He expects Friday’s employment report to look broadly similar to recent labor data, but said his decision will be heavily influenced by August inflation.
Waller argued underlying inflation is improving faster than headline measures suggest, pointing to nonmarket services that accounted for roughly half of July’s 0.2% core PCE increase. He said that excluding an imputed component, underlying inflation is doing better than core numbers imply, and noted that three-month core inflation has fallen from 4.76% in February to 3.05% through July.
While he framed the September hold as a likely direction, Waller said it is not guaranteed, saying that if inflation comes in hot he would consider a rate hike. He added that policy is only slightly restricting aggregate demand, and that it may not take much acceleration in inflation to support tighter policy.