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Focus On Waller’s Speech Tomorrow

  • There’s some attention on Waller’s (permanent voter) Brookings speech tomorrow, with prepared remarks at 1100ET before Q&A, a speech that could well provide the highlight of the week’s Fedspeak before the FOMC blackout begins Friday night.
  • His last two main topics have been "Something's Got to Give” (Oct 18) before "Something Appears to Be Giving" (Nov 28).
  • From the latter: "I am encouraged by what we have learned in the past few weeks—something appears to be giving, and it's the pace of the economy. [...] While I am encouraged by the early signs of moderating economic activity in the fourth quarter based on the data in hand, inflation is still too high, and it is too early to say whether the slowing we are seeing will be sustained. But I am increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2 percent. That said, there is still significant uncertainty about the pace of future activity, and so I cannot say for sure whether the FOMC has done enough to achieve price stability. Hopefully, the data we receive over the next couple of months will help answer that question."
  • It's quite possible he leans on the 'still waiting to see inflation on a sustainable 2% trajectory' card, something a few FOMC speakers have used, including Bostic over the weekend, to help push back on rate cut expectations (the latter something a typically dovish Goolsbee also did explicitly late Friday).
  • However, we suspect the main focus will be whether he offers a renewed timeline for the potential start to rate cuts. Recall from the Q&A of his Nov 28 appearance: “If you see this [lower] inflation continuing for several more months, I don't know how long that might be—3 months? 4 months? 5 months?—you could then start lowering the policy rate because inflation's lower."

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