Waller defines Tuesday's CPI: Hot inflation could support a near-term rate hike

Odaily Planet Daily 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 current monetary policy as being at a "crossroads." Waller stated that this direction will be determined by new information, such as the CPI report released on Tuesday, and that if data trends turn unfavorable, the Fed is currently at a stage where it should not "slack off."

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 possibility: data in the coming weeks could 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 broadening across the economy, going beyond the impact of last year's tariff increases or recent energy cost increases, possibly reflecting more widespread systemic inflation that would require tighter monetary policy.

Waller said, "If core inflation shows strength again this week, the FOMC will have to consider tightening monetary policy in the short term. It will require months of consistently lower inflation data to believe that inflation is moving in the right direction." (Jinshi)