Fed’s Waller: Will support a 75 bps interest rate hike in July policy if data comes in as I expect
19.06.2022, 22:45

Fed’s Waller: Will support a 75 bps interest rate hike in July policy if data comes in as I expect

“Federal Reserve Governor Christopher Waller on Saturday became the latest U.S. central banker to pledge a whatever-it-takes approach to fighting inflation, three days after the Fed raised interest rates by three-quarters of a percentage point and signaled more hikes to come,” per Reuters.

Reuters adds, "If the data comes in as I expect, I will support a similar-sized move at our July meeting," Waller told a Society for Computational Economics conference in Dallas. "The Fed is 'all in' on re-establishing price stability."

Additional comments

(Inflation) That's the most important thing I'm worried about.

Markets would have a "heart attack" if the central bank raised rates by a full percentage point in a single move.

It was the Fed's overly specific promises about when it would end its massive asset purchases, implemented in 2020 to shelter the economy from pandemic-related fallout, that were at fault.

Next time, he would support less restrictive promises around the end of bond purchases and more clarity around not just when the Fed would start to tighten policy but also how fast.

It’s worth noting that Atlanta Fed President Raphael Bostic also showed his comfort with the Fed’s 75 bps move during late Friday while also saying, “Inflation is not declining, implying that policy must be stronger.” The policymaker also added, “We will adjust policy based on data as needed.”

FX reaction

The news seems to increase the hawkish bets on the Fed’s next move and underpin the US dollar’s strength.

Also read: EUR/USD stays on the bear’s radar around 1.0500, ECB’s Lagarde, Fed’s Powell eyed

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