$Opendoor Technologies (OPEN.US)$ The Federal Reserve is a h...
The Federal Reserve is a hawkish pigeon! Waller: Interest rates will be cut soon
Federal Reserve Governor Waller said on Wednesday that as long as there are no major incidents in terms of inflation and employment, interest rate cuts are imminent.
In his speech, Waller said, “I believe the current data is consistent with achieving a soft landing, and I will be looking for data to support this view in the next few months. So while I don't think we've reached our final destination, I believe we're getting closer to the time we need to cut interest rates.”
In line with statements from other policymakers, Waller's remarks suggest that the FOMC is unlikely to cut interest rates at its meeting later this month, but it is very likely that they will cut interest rates in September.
In recent months, Federal Reserve officials have become more optimistic as data shows that inflation eased after an unexpected rise in the first three months of 2024.
Waller outlined three scenarios that may occur in the next few days: first, the inflation data is more positive, providing a reason to cut interest rates in the “near future”; second, the data fluctuates, but it still points to a slowdown; and third, a rebound in inflation, which forces the Federal Reserve to adopt a tighter policy stance.
In these three cases, he believes the third scenario, that is, an unexpected increase in inflation, is least likely. Waller said:
“Given that I think the first two situations are most likely to happen, I believe the time to cut interest rates is near.”
Waller's remarks on Wednesday are particularly noteworthy because he has been one of the most hawkish members of the Federal Reserve's Monetary Policy Committee this year, and he is concerned that inflation will last longer than expected.
In May, Waller expected interest rate cuts “in a few months,” as he waited for more convincing data to prove that inflation was falling. His speech on Wednesday indicated that the Federal Reserve is about to reach the threshold of cutting interest rates.
On the one hand, he said the labor market is “at its best,” that is, while wage growth is slowing down, the number of employed people is also expanding. Meanwhile, CPI inflation fell 0.1% month-on-month in June, while the core CPI rate slowed to 3.3% per annum, the lowest level since April 2021.
He said, “After the disappointing data at the beginning of 2024, we now have several months of data. I think these data are more consistent with the progress we saw in the continued decline in inflation last year, and also in line with the FOMC's price stability target. There is growing evidence that inflation data for the first quarter may be abnormal, and that tight monetary policies have controlled high inflation.”
These comments are also related to the “top three” of the Federal Reserve and the chairman of the New York Federal ReserveWilliamsWhat was said earlier is consistent. Williams pointed out, “The inflation data is moving in the right direction and is quite consistent.”
Affected by this, the market once again predicts that the Federal Reserve will adopt a more relaxed policy. According to CME's US Federal Reserve observation tool, federal funds futures market traders are betting that the Federal Reserve will cut interest rates by 25 basis points in September and cut interest rates at least once more before the end of the year.
In his speech, Waller said, “I believe the current data is consistent with achieving a soft landing, and I will be looking for data to support this view in the next few months. So while I don't think we've reached our final destination, I believe we're getting closer to the time we need to cut interest rates.”
In line with statements from other policymakers, Waller's remarks suggest that the FOMC is unlikely to cut interest rates at its meeting later this month, but it is very likely that they will cut interest rates in September.
In recent months, Federal Reserve officials have become more optimistic as data shows that inflation eased after an unexpected rise in the first three months of 2024.
Waller outlined three scenarios that may occur in the next few days: first, the inflation data is more positive, providing a reason to cut interest rates in the “near future”; second, the data fluctuates, but it still points to a slowdown; and third, a rebound in inflation, which forces the Federal Reserve to adopt a tighter policy stance.
In these three cases, he believes the third scenario, that is, an unexpected increase in inflation, is least likely. Waller said:
“Given that I think the first two situations are most likely to happen, I believe the time to cut interest rates is near.”
Waller's remarks on Wednesday are particularly noteworthy because he has been one of the most hawkish members of the Federal Reserve's Monetary Policy Committee this year, and he is concerned that inflation will last longer than expected.
In May, Waller expected interest rate cuts “in a few months,” as he waited for more convincing data to prove that inflation was falling. His speech on Wednesday indicated that the Federal Reserve is about to reach the threshold of cutting interest rates.
On the one hand, he said the labor market is “at its best,” that is, while wage growth is slowing down, the number of employed people is also expanding. Meanwhile, CPI inflation fell 0.1% month-on-month in June, while the core CPI rate slowed to 3.3% per annum, the lowest level since April 2021.
He said, “After the disappointing data at the beginning of 2024, we now have several months of data. I think these data are more consistent with the progress we saw in the continued decline in inflation last year, and also in line with the FOMC's price stability target. There is growing evidence that inflation data for the first quarter may be abnormal, and that tight monetary policies have controlled high inflation.”
These comments are also related to the “top three” of the Federal Reserve and the chairman of the New York Federal ReserveWilliamsWhat was said earlier is consistent. Williams pointed out, “The inflation data is moving in the right direction and is quite consistent.”
Affected by this, the market once again predicts that the Federal Reserve will adopt a more relaxed policy. According to CME's US Federal Reserve observation tool, federal funds futures market traders are betting that the Federal Reserve will cut interest rates by 25 basis points in September and cut interest rates at least once more before the end of the year.
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