US Fed Governor Waller floats September rate hold

Markets rallied and global bond yields dipped Thursday after a US Federal Reserve governor advocated holding interest rates steady if inflation continues to cool.

“Give disinflation a chance,” Christopher Waller said, citing “slow but continued progress” toward the Fed’s goal of 2% inflation. The market odds of a September hike fell to 50% days after Fed Chair Kevin Warsh’s hawkish Jackson Hole speech prompted traders to price in a rate increase.

Both Waller and the New York Fed President John Williams suggested tariffs and war-related energy spikes’ inflationary effects were temporary and fading, but “there’s no clear signs right now” whether existing policy will bring inflation down to target, Williams said.