Wall Street Set for Key Tuesday CPI Reading: Hot Inflation to Support Imminent Rate Hike

BlockBeats News, July 14th, Federal Reserve Governor Waller stated on Monday that if future data suggests that the inflation rate remains significantly above the 2% target, the Federal Reserve may need to raise interest rates "in the near term." He described the current monetary policy as being at a "crossroads."

Waller said that this direction will be determined by new information such as the CPI report to be released on Tuesday. If there is an unfavorable trend in the data, the Federal Reserve is currently in a phase where it should not "be complacent."

Waller stated: "Under the current policy stance, inflation could still gradually ease back to the 2% target. But I am equally concerned that another scenario may unfold, where data in the coming weeks will show that inflation will remain at a high level, or even continue to rise, which would require a tighter monetary policy in the short term."

He specifically mentioned that he is concerned that recent inflation reports indicate that price pressures seem to be broadening throughout the entire economy, beyond the impact of last year's import tariff increases or the recent rise in energy costs. This may reflect a more widespread systemic inflation that would necessitate a more contractionary monetary policy.

Waller stated, "If the core inflation rate remains hot this week, the FOMC will have to consider tightening monetary policy in the near term. It will take several months of consistently lower inflation data to conclude that inflation is moving in the right direction." (FX Street)