Waller, Williams Cool September Fed Rate Hike Bets — SkimNews
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- Christopher Waller said at a Reuters newsmaker event Thursday that if two consecutive months of improving inflation data continue into August reports, he would "be inclined to support" holding rates steady at the September 16 meeting—but would back a hike if the improvement proves "fleeting."
- John Williams told CNBC Wednesday that policymakers must "wait and see" whether an interest rate increase is needed, noting "there's no clear signs right now whether monetary policy is currently sufficient" to return inflation to target.
- CME FedWatch now prices the odds of a September 16 rate hike at essentially a coin flip, reversing Wednesday's futures-market pricing that had favored an increase—a shift driven by the Waller and Williams comments following Warsh's Jackson Hole speech.
- Three reserve bank presidents dissented at the late July meeting in favor of a rate hike, ensuring Warsh faces internal disagreement "no matter which way he ultimately leans" in what he calls "the good family fight."
- Waller used a baseball umpire metaphor Thursday to criticize Warsh's reticent communication style: "the players don't expect the umpire to have a perfect strike zone — they just need a rough idea of its parameters and some guarantee that it won't change much on every pitch."
- Warsh's Jackson Hole remarks that the Fed "must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed," or else they "have work to do," leave the bar as a judgment call ahead of the September meeting.
Why it matters: With three reserve bank presidents already dissenting in favor of a July hike and Warsh facing internal pressure from both camps, the Fed enters its September 16 meeting genuinely split—meaning the rate decision turns on whether August inflation data confirms a two-month cooling trend or proves "fleeting," with whoever loses this internal battle shaping the trajectory of Treasury yields and mortgage rates through year-end.
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