Fed’s Waller
- More action on policy rate would be needed if demand, and economic activity keep up recent pace
- We can wait, watch and see before making definitive news on policy path
- Ir real economy slows, we can hold policy steady
- Past few months’ data has been overwhelmingly positive for employment and inflation goals
- I will be watching how recent long-term rate rise evolves and its impact on economy and financial conditions
- I will be patient in waiting for data to document how spending evolves
- Anticipate ‘unusually tight’ labor market to continue loosening, but watching closely
- Will watch next ‘several’ inflation reports for clearer indication on trajectory to 2%
The ‘several’ line on inflation reports suggests that he will be waiting and watching beyond the December FOMC.
The market is comfortable that the Fed will be on hold and not raise rates further, the question is how long they stay at these levels. Current pricing for year-end 2024 cuts is down to 50 bps from 80 two weeks ago.