#沃什重申2%通胀目标 Hawkish on standby! The Fed splits 9 to 3 in the vote, Waller sends the most hawkish signal
Last night, the Federal Reserve FOMC decision held the U.S. dollar interest rate steady at 3.50%–3.75%, which the market had already expected. What truly sparked the market, however, was Fed Chair Waller’s remarks at the press conference—along with that rare 9-to-3 split vote sheet.
Key point one: The first time since 2016 to see a result with “three dissenting votes in the same direction”—9 votes in favor and 3 against. The three dissenting members—Hammack of the Cleveland Fed, Kashkari of the Minneapolis Fed, and Logan of the Dallas Fed—all argued for a 25-basis-point rate hike.
“New Fed Communications” Timiraos characterized it as: this is the first time since 2016 that three dissenting votes in the same direction have appeared, reflecting that the Fed is facing mounting pressure to raise rates internally. Wall Street has dubbed the decision a “hawkish on-standby” move, and the three dissenting votes will help fuel bets on further rate hikes over the coming months.
Key point two: The closest “acknowledgment of a rate hike” Waller has made so far. At the press conference, Waller stated plainly: “If inflation is too high and doesn’t come down, the best remedy is to raise interest rates.”
This is Waller’s closest, most explicit admission yet that “the next step could be a rate hike.” He also emphasized that this on-standby decision is not a “pause,” but “the beginning of the story, not the end.” The Fed does not have an “easy inflation target.” 2% is the only meaningful red line for forward guidance before substantive exit, calling on the market to “go capture the real economic signals.”
How is the market pricing it?
Latest data from the futures market shows a 53% probability of a September rate hike by the Fed, and a 62% probability of rate hikes within the year.
Last night, the Federal Reserve FOMC decision held the U.S. dollar interest rate steady at 3.50%–3.75%, which the market had already expected. What truly sparked the market, however, was Fed Chair Waller’s remarks at the press conference—along with that rare 9-to-3 split vote sheet.
Key point one: The first time since 2016 to see a result with “three dissenting votes in the same direction”—9 votes in favor and 3 against. The three dissenting members—Hammack of the Cleveland Fed, Kashkari of the Minneapolis Fed, and Logan of the Dallas Fed—all argued for a 25-basis-point rate hike.
“New Fed Communications” Timiraos characterized it as: this is the first time since 2016 that three dissenting votes in the same direction have appeared, reflecting that the Fed is facing mounting pressure to raise rates internally. Wall Street has dubbed the decision a “hawkish on-standby” move, and the three dissenting votes will help fuel bets on further rate hikes over the coming months.
Key point two: The closest “acknowledgment of a rate hike” Waller has made so far. At the press conference, Waller stated plainly: “If inflation is too high and doesn’t come down, the best remedy is to raise interest rates.”
This is Waller’s closest, most explicit admission yet that “the next step could be a rate hike.” He also emphasized that this on-standby decision is not a “pause,” but “the beginning of the story, not the end.” The Fed does not have an “easy inflation target.” 2% is the only meaningful red line for forward guidance before substantive exit, calling on the market to “go capture the real economic signals.”
How is the market pricing it?
Latest data from the futures market shows a 53% probability of a September rate hike by the Fed, and a 62% probability of rate hikes within the year.
