Fed's Powell: September Rate Hike to Depend Heavily on Next Week's August CPI

BlockBeats News, September 3rd, Federal Reserve Governor Waller, after making remarks indicating possible support for a rate hike, turned dovish: the labor market is in good shape, and it is expected that the August jobs report will continue this trend. Three-month core inflation has shown "significant improvement" and the pace is "encouraging." Overall PCE and core PCE are not the best indicators of inflation trends. A pending correction by the U.S. Department of Commerce on non-market price estimates may reduce the 12-month PCE by a few tenths of a percentage point.

Waller stated that the next interest rate decision will be "largely dependent on" the August inflation data to be released next week. "If we continue to make progress toward our 2% target, then I would be willing to support keeping the policy rate at its current level. But if inflation data comes in higher than expected, I would consider a rate hike. An acceleration in inflation may not necessarily lead me to support tightening policy. If there is evidence in August that the momentum toward the 2% target is reversing, then making minor adjustments to our policy stance will help ensure a rebound in inflation."