Market analysts are urging caution in interpreting Federal Reserve Governor Christopher Waller’s recent speech, suggesting that the market may have overreacted to hints of potential rate cuts.
According to Jinshi Data, analyst Cameron Crise highlighted that while Waller mentioned supporting strong action or early rate cuts if necessary, the market seemed to overlook the conditional nature of his statement. Waller dedicated a significant portion of his speech emphasizing optimism about the economy, the limitations of the “Sahm Rule” as a recession predictor, and the need for further data before deciding on the extent of easing.
Crise, along with insights from New York Fed President John Williams’ remarks, suggests that there is still no concrete evidence to support a 50 basis point rate cut by the Federal Open Market Committee (FOMC).
Waller’s statement that there is room to lower rates while maintaining some degree of restraint to ensure inflation continues towards the 2% target further underscores the need for a cautious approach.
