fishinghooks| Popular candidate for the next Fed chairman: If data guarantees, interest rates may be considered at the end of the year

Source: Wall Street

TuesdayFishinghooksFederal Reserve Governor John Waller, the frontrunner for the next Fed chairman, said that while recent data suggest that progress may have been restored on inflation, he needs to see good inflation data for "a few more months" before starting to cut interest rates. Waller does not see the need to raise interest rates further.

Waller said that the development of the US economy now seems to be closer to the Fed's FOMC expectations. Still, in the absence of significant weakness in the labour market, he needs to see good inflation data for a few more months before he can safely support a loose monetary policy stance. Mr Waller did not give his expectations for the timing or extent of the rate cut and said he would keep secret for the time being what specific progress he hoped to see in future inflation reports.

Waller doesn't see much risk in keeping interest rates high right now. He pointed out that there is no sign that the US economy will fall off a cliff. Keeping interest rate policy high for a period of 3-4 months will not cause the US economy to fall off a cliff.

Waller commented on a series of data released recently, including US April CPI data released last week. Overall, he believes recent data suggest that the Fed's rate hikes have helped dampen some of the demand that has led to the highest inflation in the US in more than 40 years. Central bankers should never say-never. But the data show that inflation in the United States has not acceleratedFishinghooksI think further increases in policy interest rates are likely to be unnecessary. "

Waller believes that the positive signal of CPI data transmission:

April's inflation data showed that a key measure of core inflation slowed for the first time in six months.

Us consumer price data for April are a reassuring sign that price pressures are not accelerating and that we can rule out a renewed acceleration of inflation.

After more good data are released, we are likely to see a decline in inflation expectations.

Waller also mentioned the recent weakness in retail sales, signs of a slowdown in the labor market and a cooling in manufacturing and services. Data on consumer spending and the labour market also suggest that the Fed's monetary policy is in an appropriate position to put downward pressure on inflation:

The Fed is trying to put downward pressure on consumer spending.

The ratio of job vacancies to unemployment has dropped a lot. While job creation has been solid, other indicators, such as worker turnover, suggest that the extremely tight labour market conditions that have led to rising wages are easing.

There is no need for a sharp rise in unemployment.

While affirming the latest progress in inflation in the United States, Waller also said that recent price data show only modest progress in achieving the Fed's 2% inflation target, and because progress is very limited, this does not change his view that he needs to see more evidence of a slowdown in inflation before supporting any loose monetary policy. He rated the latest CPI report in the United States as C +. He also warned that stronger pricing power could make inflation more sticky.

Waller's speech attracted a lot of market attention, not least because he is a Fed governor who has the right to vote on FOMC. Earlier this year, Nick Timiraos, known as the "New Federal Reserve News Agency," pointed out that Federal Reserve Governor Waller's accurate judgment of the direction of the US economy two years ago increased his influence, and if Trump is re-elected, Waller may become a strong candidate for the next Fed chairman.

On the same day, Bostic, chairman of the Federal Reserve of Atlanta, reiterated that he did not expect to cut interest rates until the fourth quarter. As for the latest U. S. April CPI inflation data, he said that a single figure does not represent a trend. Like his colleagues, he believes that interest rates are restrictive, but they may be less effective.

The Fed officials' remarks confirmed market expectations that the Fed's FOMC would cut interest rates 1 or 2 times this year, analysts said. Waller's recent speech is slightly hawkish, which means he supports a tight monetary policy.

Risk reminder and exemption clause

There are risks in the market, so you need to be careful when investing. This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any comments, opinions or conclusions in this article are in line with their specific circumstances. If you invest accordingly, you will be held responsible.