Waller's Rate Hike Odds Tumble on Inflation Deceleration
US stock futures gained modestly after Federal Reserve Governor Christopher Waller signaled openness to keeping interest rates steady at the upcoming FOMC meeting. In a recent Reuters interview, Waller said he'd support holding rates unchanged if incoming inflation data continues to show disinflation.
The timing of Waller's comments is significant as they come on the heels of Fed Chair Kevin Warsh's hawkish comments that lifted near-term rate hike expectations. However, Waller emphasized a trend that he called 'encouraging' - the deceleration in inflation from 4.76% in February to 3.05% over the past three months.
Markets responded positively to Waller's remarks with the CME FedWatch tool showing a drop in the likelihood of a rate hike to 54.6%, a 12-percentage-point decline from before the interview. The bond market also stabilized, and European stock futures gained during the session.