Fed’s Waller: Seeing some signs of softer data

• Not all tariffs are passed through
• We have to respond to hard data
• Waiting to see if weakness in soft data shows up in broader statistics
• Doesn’t see a case for a March rate cut (market was only pricing in a slim chance anyway)
• Could see rate cuts after the March meeting (May priced at 60% for a cut)
• It does sound like we’re getting the band back together on ‘team transitory’ regarding tariff impacts
• It is very hard to eat a 25% tariff
• I’m particularly interested to market pricing on inflation expectations
• I don’t particularly pay attention to consumer inflation expectation surveys

Comments earlier in the year suggested upside risks to inflation were the main challenge for the Fed but now with Waller and Musalem previously, we’re seeing more worried about growth.

This article was written by Adam Button at www.forexlive.com.