Fed Governor Christopher Waller supports a 25 basis point cut at the September meeting and forecasts additional interest rate cuts in the next 3–6 months, according to a report from Cailian Press on August 29.
Mr. Waller noted that only if the August employment report shows significant weakness and inflation is well controlled would deeper cuts be needed in September; excluding the temporary impact of tariffs, core inflation is near 2%.
MAIN CONTENT
Supports a 25 basis point cut at the Fed meeting in September, according to Cailian Press.
Forecasts further interest rate cuts in the next 3–6 months if conditions are appropriate.
Core inflation near 2% when excluding the temporary impacts of tariffs; the policy interest rate is expected to be in the range of 1.25 to 1.50 percentage points above neutral.
What did Waller say about the possibility of interest rate cuts at the September meeting?
Short answer: He supports a 25 basis point cut at the September meeting, according to a report from Cailian Press on August 29.
Analysis: Supporting a 25 basis point cut reflects a cautious view but aims to gradually ease monetary policy when economic conditions are appropriate. This is a small cut, aimed at balancing support for growth and maintaining control over inflation.
"Supports a 25 basis point cut at the September meeting and expects further cuts in the next 3–6 months if economic conditions permit."
– Christopher Waller, Member of the Board of Governors of the Federal Reserve, August 29, Cailian Press
What conditions could prevent a larger cut in September?
Short answer: Mr. Waller believes that deeper cuts will not be necessary in September unless the August employment report shows significant weakness and inflation is well controlled.
Analysis: Employment and inflation criteria are two key factors. If the labor market remains strong or inflation is not yet truly stable, a strong cut could jeopardize the goal of price stability. Therefore, the Fed prioritizes actual data before taking strong actions.
How does Waller view core inflation and the gap compared to neutral interest rates?
Short answer: He stated that, excluding the temporary impact of tariffs, core inflation is near 2% and policy interest rates are being held at a "moderately restrictive" level, around 1.25 to 1.50 percentage points above neutral.
Analysis: This statement suggests that the Fed sees core inflation approaching the long-term target, thus only gradual adjustments to the policy rate are needed. The gap of 1.25–1.50 percentage points above neutral reflects a policy stance that remains restrictive compared to neutral conditions.
"Excluding the temporary effects of tariffs, core inflation is close to 2%, and current policy is only moderately restrictive."
– Christopher Waller, Member of the Board of Governors of the Federal Reserve, August 29, Cailian Press
Practical impacts on the market
Short answer: Information regarding support for a 25 basis point cut could reduce short-term interest rate expectations and affect asset prices sensitive to interest rates.
Analysis: Bond and equity markets typically react quickly to policy signals. A small cut could encourage short-term investment activity, but the sustainability of the trend depends on upcoming employment and inflation data.
Frequently Asked Questions
Why is a 25 basis point cut considered reasonable?
A 25 basis point adjustment is a small move, allowing the Fed to gradually ease while still observing the impact on inflation and employment before deciding on larger steps.
What does a forecast of additional cuts in the next 3–6 months mean for actual interest rates?
This means the Fed expects to continue gradually lowering rates if economic data (employment, inflation) supports it, but does not commit to a specific level or timeline.
Does core inflation near 2% mean the target has been achieved?
Core inflation near 2% is a positive sign, but the Fed is considering many other indicators to confirm a sustainable trend before making stronger policy changes.
Source: https://tintucbitcoin.com/thong-doc-waller-ung-ho-giam-025/
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