Federal Reserve Governor Christopher Waller stated that high inflation is the primary risk facing the U.S. central bank, given a stabilizing labor market. He also commented that forward guidance is a valuable monetary policy tool but not always useful.
2 storiesMacro, Rates & FXFederal Reserve (FOMC) rate decisionsFed Chair communications & speechesUS CPI & Core CPI inflation data
Fed's Waller: Inflation is chief risk, guidance valuable but not always
IN SHORT
Federal Reserve Governor Christopher Waller stated that high inflation is the primary risk facing the U.S. central bank, given a stabilizing labor market. He also commented that forward guidance is a valuable monetary policy tool but not always useful.
Frequently asked questions
Forward guidance refers to communication from a central bank about its future policy intentions, such as the likely path of interest rates, to influence market expectations and economic behavior.
When effective, forward guidance can help steer market interest rates, thereby strengthening the impact of monetary policy and potentially influencing economic conditions more quickly than adjusting the policy rate alone.
Inflexible forward guidance can hinder a central bank's ability to respond to new economic developments and may be problematic when multiple economic outcomes are equally likely, potentially impeding policy transmission.
The Federal Reserve's target for inflation is 2%.
What Happens Next
01The Federal Reserve will release consumer price inflation data for June.
02The Federal Open Market Committee will hold its next meeting from July 28-29.