Fed’s Waller: Jobs, economic strength give Fed space to hike further

Federal Reserve Governor Christopher Waller conveys his favor for raising rates at July FOMC meeting per the prepared remarks for delivery before a gathering held by The Money Marketeers of New York University shared by Reuters.

The policymaker also showed his hesitance to call an all clear on US inflation and favors more rate rises this year

“The robust strength of the labor market and the solid overall performance of the U.S. economy gives us room to tighten policy further,” said Fed’s Waller.

Fed’s Waller cited example of 2021 summers, when the inflation briefly slowed before getting much worse, to tame the fears emanating from this week’s downbeat US inflation clues.

Additional comments

Fed likely to need two more 25 basis point rate hikes this year.

Banking sector is strong and resilient.

Bulk of past rate hikes already have impacted economy.

Market implications

The aforementioned headlines join the early-Asian session consolidation to allow the US Dollar to take a breather. That said, the US Dollar Index (DXY) licks its wounds near the lowest levels since since April 2022 the previous day, down 2.45% on a week so far, as downbeat inflation clues from the US push back the Federal Reserve (Fed) hawks.

Also read: Forex Today: Dollar's downward spiral continues

Update

Following the initial statements, mentioned above, Reuters unveiled additional comments suggesting that Fed’s Waller flags fears of soft landing while citing the US central bank’s efforts to tame inflation. That said, the policymaker cites job market and economic strength as the biggest victims of rate hikes, per the news.

Fed's Waller also suggests that two more softer prints of the Consumer Price Index (CPI) can flag the policy pivot while also adding that September meeting is a live monetary policy meeting.