Federal Reserve Board of Governors member, Christopher Waller, commented US economy, inflation and tariffs impact today. Here is the highlight from his remarks.
Fed Waller
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app- I don't expect tariffs to have a significant impact on inflation. The current US rates are restrictive, though not tight enough to cause a recession.
- The labour market is not behaving like an economy that is overheating.
- A return to the zero lower bound does not seem likely anytime soon. 2010s may prove an outlier.
- Until Trump's policies are clear, it will be hard for markets and the Fed to assess the next year.
- In the near term, I don't think there will be a huge impact on inflation from tariffs.
- Geopolitical conflicts and tariffs could be a source of renewed price pressure. But I don't think draconian tariffs will be implemented.
- There is tremendous uncertainty around what will happen with tariffs. Lagged wage increases may ease ongoing service price inflation.
- The economy overall on solid footing, nothing to suggest labor market will weaken dramatically in coming months.
- Though recent inflation progress has been slow, much of that is due to imputed prices for housing and services that are a less reliable guide to underlying price pressures.
- Base effects will improve inflation in 2025; more recent monthly and other shorter-term data also indicates improvement to come.
- Inflation will continue to make progress towards 2%. I will support further cuts in 2025, but pace will depend on further inflation progress.
- US deficits may also be driving long yields higher. Long term yields may have more of an inflation premium, but, the Fed will fix that.
- Central bankers have a broad set of challenges ahead, from aging populations to geopolitical conflict and challenges to globalization.
- Monetary rules are a good check on judgment but should not be used exclusively.
EURUSD (H1 interval)
EURUSD is still down 0.4% today, however US treasuries yields dropped from 4.72% to 4.68% after today macro readings and quite dovish Waller remarks. A pair is also pressured by weak macro readings from Germany.
Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
