Waller of the Fed Mentions Possibility of Additional Tightening if Core Prices Rise

Christopher Waller, a member of the U.S. Federal Reserve, stated that if core inflation rises higher than expected, the Federal Open Market Committee may need to consider additional tightening. He emphasized that while the labor market is stable, prices are under upward pressure, and this week's Consumer Price Index (CPI) report will be a turning point for monetary policy. In a speech at the New York Business Economics Association on the 13th, Waller mentioned that monetary policy is at a critical juncture, and if core prices come in strong, they should consider further tightening measures. Currently, the U.S. economy is robust, but inflation significantly exceeds the Fed's target, with the core Personal Consumption Expenditures (PCE) inflation rate rising to 3.4%. Waller noted that the Fed's response to inflation in 2021 was delayed, and if inflation remains high, the Fed must prepare for a stronger response. He explained that increased investment in AI is driving up prices for certain items, and the shortage of memory semiconductors is affecting consumer electronics prices. The labor market remains balanced, with the average new employment over the past three months improving to 111,000 jobs per month. Waller stated that this week's CPI and Producer Price Index (PPI) reports will be important data for assessing the PCE price trends.

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