Waller Backs Rate Pause at September Meeting Amid Stable Inflation Trends

Fed Governor Christopher Waller expressed support for keeping interest rates steady at the September meeting of the central bank. In contrast to Fed Chairman Kevin Warsh's more hawkish tone, Waller is leaning towards a rate pause if inflation data due over the next two weeks remains stable.

Waller cited current inflation trends as evidence that tariff impacts have been muted and higher energy prices have not substantially affected other parts of the economy. He noted that while inflation is 'meaningfully above' the Fed's 2% target, recent trends suggest signs of disinflation.

The market-implied odds for a rate hike at the September meeting dropped sharply after Waller's comments, with traders pricing in just a 48.4% probability. This represents a significant decrease from Wednesday's odds, which stood at around 63.4%.