Fed's Waller turns cautious on rate cuts and warns of a 'lasting increase in inflation'

Fed Governor Chris Waller warned that higher oil prices from the Iran war and the lingering effect of U.S. tariffs could lead to a more lasting rise in inflation. That increases the odds the Fed will avoid further rate cuts, a hawkish signal for rates-sensitive assets. The message is market-wide in scope because it directly affects policy expectations, yields, and risk appetite.

Analysis

Fed Governor Chris Waller warned that higher oil prices from the Iran war and the lingering effect of U.S. tariffs could lead to a more lasting rise in inflation. That increases the odds the Fed will avoid further rate cuts, a hawkish signal for rates-sensitive assets. The message is market-wide in scope because it directly affects policy expectations, yields, and risk appetite.