Waller's Dovish Tone Sends Rate Hike Odds Tumbling
Federal Reserve Governor Christopher Waller stated that he would support keeping short-term interest rates at their current levels unless inflation worsens, giving markets a more optimistic outlook ahead of the upcoming Fed meeting.
In his speech on September 3, Waller said that 'with economic activity and the labor market in good shape,' he would support holding the target for the federal funds rate at its current setting, but added that 'if inflation comes in hot, I would consider a rate hike.'
The market reacted quickly to Waller's comments, with the CME Group's FedWatch tool putting the chances of a short-term interest rate hike at 50.4%, down significantly from 63.2% the day before.
Mortgage rates are still trending up, with the 30-year rate averaging 6.71% this week, up from 6.66% the week before, according to Freddie Mac.