Fed's Waller says FOMC may need to consider near-term rate hike
Federal Reserve Governor Christopher Waller said sticky inflation could require a near-term rate increase and warned an AI-market pullback could sharply tighten financial conditions if confidence in disinflation weakens.
Federal Reserve Governor Christopher Waller said the Fed may need to raise interest rates in the near term if incoming data show inflation remains well above the central bank’s 2% target, while cautioning against tightening too early and risking a recession. He said a reversal in AI-linked markets could cause "pretty big" or "considerable" changes in financial conditions, adding to uncertainty around the outlook. Waller said the labor market remains stable and that inflation could still ease without more restraint, but warned policymakers should not repeat their slow 2021 response if confidence in disinflation fades or price pressures broaden.
- FOMC: Federal Open Market Committee, the Fed body that sets U.S. monetary policy.
- disinflation: A slowdown in the pace of inflation, meaning prices are still rising but at a slower rate.
- financial conditions: The overall ease or restrictiveness of obtaining funding across markets, often reflected in stock prices, bond yields, credit spreads, and the dollar.