Federal Reserve Governor Christopher Waller said on Tuesday in an online speech that if upcoming August inflation data confirm a slowdown in price increases, he would support holding the policy rate steady at the Federal Open Market Committee (FOMC) meeting later this month. He welcomed recent indicators, saying that "finally we are beginning to see some signs of inflation cooling." Waller cited energy price increases due to the U.S.-Iran conflict and heightened investment activity driven by the AI boom as upside risks to inflation, but he asserted that concerns about energy prices pushing up a broad range of prices "have not materialized." He described the economy as optimistic, with rising stock prices supporting consumer spending and a stable labor market, and emphasized that he would closely watch the August Consumer Price Index (CPI) as a key data point.
Waller signals support for holding rates steady, reducing likelihood of a hike, which typically lowers the policy rate path.
Holding rates steady and cooling inflation expectations likely lead to lower long-term yields.
