Fed’s Waller calls for two more rate hikes likely by year-end

investmentnews.com:

Federal Reserve Governor Christopher Waller said he expects the US central bank will need to raise interest rates twice more this year to bring inflation down to its target, though more good data on prices could obviate the need for the second hike.

“I see two more 25-basis-point hikes in the target range over the four remaining meetings this year as necessary to keep inflation moving toward our target,” Waller said Thursday in remarks prepared for a dinner event hosted by the Money Marketeers of New York University. “I see no reason why the first of those two hikes should not occur at our meeting later this month.”

Answering questions from the audience after the speech, Waller pointed out that the US Bureau of Labor Statistics will publish two more consumer price index reports between the Fed’s upcoming July 25-26 policy meeting and the next gathering in September. He suggested good news could lead the central bank to cease rate hikes after this month.

“There’s a lot of discussion out there about, not so much the next meeting, but the September meeting. What I’m trying to say is the September meeting is a ‘live’ meeting and it depends on the data,” Waller said. “If the data looks like we’re making progress — we’ll get two more CPI reports. If they look like the last two, the data would suggest maybe stopping.”

Fed officials are widely expected to resume rate increases at the July 25-26 meeting after they paused their 15-month tightening campaign in June. But fresh data Wednesday, showing inflation cooled to the lowest levels since 2021, have raised doubts that Fed officials will opt for more rate hikes beyond that.

Waller argued in his speech that, contrary to conventional wisdom, the Fed’s five percentage points of