Waller says more Fed hikes are needed but not necessarily back to back
The Fed governor says policymakers can rely on signaling rather than firm guidance as officials weigh the pace of further tightening.
Published
Federal Reserve Governor Christopher Waller said more interest rate increases are still needed, but he does not believe they must come in consecutive moves. He said the Fed can instead rely on what he called signaling, giving markets a sense of its thinking without committing to a fixed path through forward guidance.
The remarks echo minutes from the Fed's September meeting, which showed unanimous support among officials for that month's rate increase. Almost all participants saw inflation risks tilted to the upside, while they viewed job market risks as broadly balanced. The minutes also showed a consensus that another hike was likely before year-end, a view Waller's comments keep intact even as he leaves the timing open.
The comments land in a week when Fed Vice Chair Philip Jefferson and New York Fed President John Williams pulled the 10-year Treasury yield back from its recent high, cutting the odds of an October hike toward a coin flip. Waller's insistence that hikes are still coming keeps him in step with the minutes, but his openness on timing and his preference for signaling over firm guidance adds to the uncertainty Jefferson's talk of taking more time had already introduced.
That leaves long-dated Treasury yields exposed to whichever economic data point breaks the split among officials, with investors left to judge how much weight to put on signals that stop short of a commitment.