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Fed's Waller says if war creates high inflation and weak labour market, could call for holding rates steady

Waller's comments highlight the Fed's concern over the dual risk of high inflation alongside a weakening labor market, signaling potential uncertainty in their rate path.

Newsquawk StaffPublished On the live feed at — 3 more headlines followed before this page went public
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Fed's Waller says if war creates high inflation and weak labour market, could call for holding rates steady

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  • The longer the war remains unresolved, inflation and job risks increase.
  • High inflation and weak job market could be a challenge for the Fed. March headline PCE likely to hit 3.5% Y/Y.
  • Possible energy price surge could have a lasting inflation impact.
  • Markets appeared to have undervalued risk of extended conflict.
  • Will be closely watching how inflation expectations react.
  • If swift resolution to war, can look through price energy shock.
  • After series of shocks, it gets harder to look through inflation jump.
  • Will closely watch jobs data for mounting signs of stress.
  • Job market breakeven rate is now likely around zero.
  • Period of negative jobs growth might not signal recession.
  • Changes to job market make it challenging to analyst now.
Context

The emphasis on ongoing geopolitical tensions suggests that the central bank might hold rates steady if inflation pressures mount while job growth stalls, indicating a careful balancing act ahead. This underscores the likelihood that market expectations may not fully price in the risks associated with protracted conflict and its inflationary impacts.

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