DistantNews
Support us
'Dove' Waller says Fed may consider rate hikes if core inflation stays high
🇰🇷 South Korea /Economy & Trade

'Dove' Waller says Fed may consider rate hikes if core inflation stays high

From Dong-A Ilbo · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • A key Federal Reserve official, Christopher Waller, known as a "dove," indicated a potential interest rate hike if core inflation remains high.
  • Waller cited rising energy prices, tariffs, and AI infrastructure demand as contributing factors to inflation.
  • The market is currently pricing in a possibility of interest rate hikes by next year, with the Fed's next policy meeting scheduled for late July.

Christopher Waller, a notably "dovish" member of the U.S. Federal Reserve's board of governors, has signaled a potential shift towards considering interest rate hikes if upcoming core inflation data proves stubbornly high. This statement comes at a time of renewed concerns about inflation, fueled partly by rising oil prices due to Middle East tensions.

Waller emphasized that the Fed cannot simply wait for inflation to subside on its own. "Watching inflation disappear in front of our eyes is not an option," he stated, suggesting that proactive measures might be necessary. He pointed to several factors contributing to inflationary pressures, including the impact of energy prices, tariffs, and the burgeoning demand for artificial intelligence infrastructure. While acknowledging that AI investment has had a limited impact so far, Waller warned that sustained investment could significantly increase its inflationary effect.

Watching inflation disappear in front of our eyes is not an option.

— Christopher WallerFederal Reserve Governor emphasizing the need for action against persistent inflation.

The U.S. Personal Consumption Expenditures (PCE) price index rose 4.1% in May, well above the Fed's 2% target. The Consumer Price Index (CPI) also hit a three-year high of 4.2% in May. Although forecasts suggest a slight decrease in the June CPI to 3.8% and core inflation holding at 2.9%, Waller expressed caution about inflation spreading throughout the economy. He specifically noted signs of persistent pressure on goods prices, even predating the recent energy price shocks.

Waller also drew a parallel to past policy mistakes, stressing the need to avoid both acting too late, as occurred in 2021-2022, and acting prematurely. The Federal Open Market Committee (FOMC) is scheduled to convene on July 28-29 to decide on the July interest rate. Market indicators, such as the CME FedWatch tool, currently suggest a roughly 39% probability of a rate hike. Futures markets are increasingly anticipating rate increases, with some expecting two 0.25% hikes by April of next year, potentially starting as early as October.

We must not repeat the mistake of responding too late to inflation in 2021-2022.

— Christopher WallerFederal Reserve Governor referencing past policy missteps regarding inflation control.
DistantNews Editorial

Originally published by Dong-A Ilbo in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

More Stories

From Our Blog