Waller sets the tone for Tuesday's CPI: hot inflation supports rate hikes in the short term

Odaily Planet Daily News Federal Reserve Governor Waller said Monday that if future data shows inflation is still well above the 2% target, the Federal Reserve may need to raise interest rates "in the short term." He described the current monetary policy as being at a "crossroads." Waller stated that this direction will be determined by new information, including the CPI report released on Tuesday, and if data trends turn unfavorable, the Fed is now in a phase where it should not "ease off."

Waller said: "At the current policy level, inflation could still gradually fall back to the 2% target. But I am equally worried that another scenario could occur, where data in the coming weeks will show that inflation remains at a high level or even continues to rise, which would require tighter monetary policy in the short term." He specifically expressed concern that recent inflation reports suggest price pressures appear to be spreading across the economy, going beyond the effects of last year's tariff increases or recent rises in energy costs, potentially reflecting broader systemic inflation that would require tighter monetary policy.

Waller said, "If the core inflation rate is hot again this week, the FOMC will have to consider tightening monetary policy in the short term. We need to see inflation data decline consistently over several months to believe that inflation is moving in the right direction." (Jin Shi)