Fed’s Waller warns inflation may force new hikes, rattling risk assets
Federal Reserve Governor Christopher Waller warned that stubborn inflation and surging energy costs now outweigh labor market risks, signaling that rate hikes are “back on the table” and jolting expectations that had been primed for cuts a few months ago.Waller said US CPI hit 3.8% in April with energy prices up 17.9% as oil climbed above $100 per barrelCore PCE inflation rose to 3.3%, its highest level in more than two years, while unemployment held at 4.3% and GDP grew 2%He urged dropping the Feds “easing bias” and said rate increases cannot be ruled out if inflation does not abate soon In a speech described as “hawkish” by Wall Street Journal economics correspondent Nick Timiraos, Waller argued that “inflation is not headed in the right direction” and that the balance of risks has shifted away from the labor market and toward price stability. Why is Waller calling for an end to the Feds easing bias？ He pointed to Aprils 3.8 percent year on year consumer price index reading and a 17.9 percent jump in energy costs, which he tied to Middle East conflicts that have pushed oil above $100 per barrel and filtered into gasoline, transport and production costs across the economy. FED SIGNALS