Federal Reserve Board member Waller is cautious about interest rate cuts, warning of long-term conflict risks
Federal Reserve Board Member Waller stated that due to the energy shock caused by the Iran conflict, he is cautious about a short-term rate cut and warns that the conflict could keep inflation persistently high.
He proposed two scenarios: if the Strait of Hormuz reopens and energy and trade recover, inflation would fall back to 2% and he would lean towards a rate cut later this year to support the labor market; if oil prices remain high and the labor market remains weak, policy space is limited, requiring a trade-off between higher inflation and a weaker labor market, and if inflation risks exceed labor market risks, he would maintain the current rate.
He proposed two scenarios: if the Strait of Hormuz reopens and energy and trade recover, inflation would fall back to 2% and he would lean towards a rate cut later this year to support the labor market; if oil prices remain high and the labor market remains weak, policy space is limited, requiring a trade-off between higher inflation and a weaker labor market, and if inflation risks exceed labor market risks, he would maintain the current rate.

