- Waller said he is inclined to hold the federal funds rate at its current setting if the next two weeks of inflation data sustain recent disinflation trends.
- He said tariff effects and higher energy prices have had limited spillover into the broader economy, while the three-month preferred inflation rate has declined to 3.05% from 4.76% in February.
- Market-implied odds of a September rate hike fell to 48.4%, down about 15 percentage points from the prior day, after Waller's remarks.
- Waller's view contrasts with Chair Kevin Warsh's recent assessment that softer monthly inflation readings do not show meaningful improvement in underlying trends.
- The Fed's next key inputs are the consumer and producer price indexes due next week, which feed into the Fed's preferred PCE inflation measure.
Quotes
“If this continues in the data due over the next two weeks, I would be inclined to support holding the target for the federal funds rate at its current setting”
“Give disinflation a chance. We can wait one meeting”
“That is a considerable improvement, and the speed of this downward trajectory is encouraging”
“do not tell me that underlying trends have meaningfully improved.”