Waller Channels Lennon with Call to 'Give Disinflation a Chance'

Federal Reserve Governor Christopher Waller has signaled that he may support keeping interest rates steady at the central bank's upcoming policy meeting in September. In a Reuters NEXT Newsmaker event, Waller referenced John Lennon's plea to 'give peace a chance' and paraphrased it as 'give disinflation a chance.' He emphasized the importance of allowing a cooling process to play out before considering further action.

Waller stated that if inflation data for August shows continued progress toward the Fed's 2% target, he would support holding rates at their current level. However, he also noted that if the data comes in hot, he would consider a rate hike.

The Fed governor acknowledged that inflation is currently above target but emphasized that it's making slow but steady progress toward reaching the desired level. He stressed that an easing of inflation, measured by the change over three months in the Consumer Price Index on an annualized basis, would be a key indicator for his decision-making.

Waller's comments suggest that he is leaning towards a hold on rates as long as the data supports it. This shift in tone has led to a decrease in rate-hike bets among traders, with short-term interest-rate futures now indicating a higher likelihood of rates remaining unchanged this month.