Waller: Fed Has Zero Tolerance for Persistently High Inflation

Waller stated in his testimony, "FOMC members have zero tolerance for persistently high inflation, and we are united in our commitment to restoring price stability." He emphasized that monetary policy is the top priority right now, "If we get the policy right------and we will------the inflation surge of the past five years will be history."

Written by: Zhang Yaqi, Wall Street Insight

Fed Chair Waller reiterated his anti-inflation stance, showing a tough attitude towards persistently high prices and committing to getting monetary policy right.

On Tuesday, in a written testimony submitted to the House Financial Services Committee, Waller stated, "Committee members have zero tolerance for persistently high inflation, and we are united in our commitment to restoring price stability." He emphasized that monetary policy is the top priority right now, "If we get the policy right------and we will------the inflation surge of the past five years will be history."

This statement further reinforces the Fed's tightening signals and echoes warnings from several Fed officials in recent weeks------previously, multiple decision-makers indicated that further rate hikes may be necessary to curb inflation. The testimony was released on the same day that the U.S. Bureau of Labor Statistics published the June consumer inflation data, with the market closely watching the correlation between the two.

Economic Outlook: Strong Labor Market, Uncertainty in AI Prospects

Waller holds a relatively optimistic view of the overall economy, describing the current labor market as "generally stable," with almost no signs of layoffs, and nominal wage growth remaining robust.

Regarding the AI boom, Waller is more cautious. He acknowledged that AI is driving significant increases in business investment but also brings new uncertainties to the economy. "We are not yet clear on the extent to which the economy can benefit from AI developments," Waller said:

"New economic opportunities also present new challenges for policymakers, and the Fed is closely monitoring their impact on inflation and the labor market."

Rate Decision: Four Times of Holding Steady, Internal Divisions Emerge

The minutes from the Fed's monetary policy meeting on June 16-17 show that as concerns about the labor market eased slightly, officials' focus on inflation significantly increased. This was the first meeting chaired by Waller since taking office, and the attending officials unanimously voted to keep the federal funds rate target range unchanged at 3.5% to 3.75%, marking the fourth consecutive pause in adjustments.

However, the latest rate forecasts released alongside the decision show clear internal divisions. Nine officials expect at least one more 25 basis point rate hike this year, with six expecting at least two hikes; another nine officials expect rates to remain unchanged or shift towards cuts. Notably, Waller, who has consistently criticized the practice of "forward guidance," chose not to submit his personal rate forecast.

Commitment to Anti-Inflation: Strengthened Since Taking Office

Since taking office in May, Waller has consistently prioritized addressing inflation as a core policy issue, repeatedly emphasizing that the primary goal of monetary policy is to combat inflation. This congressional testimony reaffirms that stance, indicating that the Fed will not easily shift to easing until inflation reaches target levels, which has direct implications for the bond market and interest rate-sensitive assets.

Disclaimer: This content is provided for general branding and informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online events, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets or to use any services. Crypto assets are highly volatile and may result in loss. WEEX services and online events may not be available in all regions and are subject to applicable laws, regulations, and eligibility requirements. You are responsible for ensuring that your use of WEEX services complies with local laws and for carefully assessing the risks before participating in any crypto-related activities.