Waller sets the tone for Tuesday's CPI's significance: Hot inflation would support a near-term rate hike

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

Waller said: "At the current policy level, it is still possible for inflation to gradually fall back to the 2% target. But I am equally concerned about another scenario, where data in the coming weeks would show inflation remaining at elevated levels or even continuing to rise, which would necessitate tighter monetary policy in the near term." He specifically noted his worry that recent inflation reports show price pressures appear to be broadening across the economy, beyond the impact of last year's tariff increases or recent rises in energy costs, possibly reflecting more systemic inflation that would require tighter monetary policy.

Waller said, "If core inflation proves hot again this week, the FOMC will have to consider tightening monetary policy in the near term. We need to see inflation data persistently low for months to believe that inflation is moving in the right direction." (Jinshi Data)