Federal Reserve Board of Governors member, Christopher Waller, commented US economy, inflation and tariffs impact today. Here is the highlight from his remarks.
Fed Waller
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Open account Try demo Download mobile app Download mobile app- I don't expect tariffs to have a significant impact on inflation. The current US rates are restrictive, though not tight enough to cause a recession.
- The labour market is not behaving like an economy that is overheating.
- A return to the zero lower bound does not seem likely anytime soon. 2010s may prove an outlier.
- Until Trump's policies are clear, it will be hard for markets and the Fed to assess the next year.
- In the near term, I don't think there will be a huge impact on inflation from tariffs.
- Geopolitical conflicts and tariffs could be a source of renewed price pressure. But I don't think draconian tariffs will be implemented.
- There is tremendous uncertainty around what will happen with tariffs. Lagged wage increases may ease ongoing service price inflation.
- The economy overall on solid footing, nothing to suggest labor market will weaken dramatically in coming months.
- Though recent inflation progress has been slow, much of that is due to imputed prices for housing and services that are a less reliable guide to underlying price pressures.
- Base effects will improve inflation in 2025; more recent monthly and other shorter-term data also indicates improvement to come.
- Inflation will continue to make progress towards 2%. I will support further cuts in 2025, but pace will depend on further inflation progress.
- US deficits may also be driving long yields higher. Long term yields may have more of an inflation premium, but, the Fed will fix that.
- Central bankers have a broad set of challenges ahead, from aging populations to geopolitical conflict and challenges to globalization.
- Monetary rules are a good check on judgment but should not be used exclusively.
EURUSD (H1 interval)
EURUSD is still down 0.4% today, however US treasuries yields dropped from 4.72% to 4.68% after today macro readings and quite dovish Waller remarks. A pair is also pressured by weak macro readings from Germany.
Source: xStation5
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