Fed Governor Waller (dissenter) says he dissented in favour of 25bps cut at last meeting because policy is still restricting activity too much
Importance
Level 1
- Labour market remains weak despite solid economic growth.
- Labour market does not look remotely healthy, and while supply was a factor, demand is weak.
- Inflation is elevated from tariffs but monetary policy should look through those effects given anchored expectations.
- Expects weak job numbers from last year to be revised lower to reflect virtually no growth in payroll employment in 2025.
- Policy should be closer to neutral, and perhaps around 3% vs. current rate range of 3.50-3.75%.
- Heard of multiple layoffs planned for 2026 with considerable doubt about job growth and significant risk of a substantial deterioration.
- Inflation excluding tariffs is near Fed's 2% goal and on path to reach it.
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