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More from Waller: Lots of uncertainty round long run Fed Fund charge, 3% appears proper

Federal Reserve Governor Christopher Waller Q&A

  • Lots of uncertainty around long-term Fed funds rate; 3% seems right
  • Long-term bond yields don’t suggest loose financial conditions
  • No one from the Trump administration has talked to him about taking the Fed chair
  • Cut rates in July and then adjust policy meeting by meeting
  • Stablecoins introduce competition into the payment system; does not see them as a threat
  • It’s going to be a slow process unloading Fed-owned mortgage bonds
  • Doesn’t see huge appetite to sell Fed-owned mortgage bonds
  • Data should determine pace of Fed rate cuts
  • Market price signals will determine how far the Fed shrinks the balance sheet
  • It is not uncommon for renovations to see cost overruns
  • There is nothing wrong with Fed officials disagreeing with each other
  • All Fed officials value central bank independence

In the Q&A session here Federal Reserve Governor Christopher Waller reinforced his call for a July rate cut, but emphasised that further policy moves should be guided by incoming data and assessed meeting by meeting.

While noting that long-term market rates don’t suggest overly loose financial conditions, he acknowledged considerable uncertainty around the neutral level of the Fed funds rate, tentatively placing it around 3%.

On balance sheet policy, Waller indicated the Fed is in no rush to unwind mortgage-backed securities, calling the process slow and noting little appetite for aggressive sales. He added that market signals—not arbitrary targets—should guide how far the Fed shrinks its holdings.

Separately, Waller also downplayed concerns around stablecoins, viewing them as a competitive force in the payments space rather than a systemic threat. Addressing speculation about his potential elevation under a second Trump administration, Waller said no one from the Trump team has approached him about taking the Fed chair role. He also stressed that internal debate among Fed officials is healthy, and reiterated the shared commitment across the FOMC to maintaining central bank independence.

Earlier:

Christoper Waller

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