Fed rate-hike bets ebb after Waller's inflation comments

Federal Reserve Governor Christopher Waller indicated on Thursday that if August Consumer Price Index data shows a cooling of inflation pressures, he is inclined to support holding the policy rate steady at the September meeting. His moderate hawkish tone, as reflected by an FXS Speechtracker score of 6.1, suggests a conditional flexibility in his stance.

Waller stated that if August inflation shows "continued progress," policy will likely be held steady in September, but a "hot" print could trigger a rate hike. This data-dependent reaction function and low tolerance for renewed inflation acceleration emphasize the Fed's cautious approach, even as disinflation and solid GDP and consumption growth are acknowledged.