Fed governor Waller said the US labor market has stabilized while inflation has
re-accelerated, and that inflation risks now exceed employment risks—a full
reversal from a year ago when weak jobs supported rate-cut bets. He said policy
focus should shift back to containing inflation. Markets are focused on June CPI
due July 14, the last major inflation print before the Fed's July 28-29 meeting.
International oil has fallen to roughly $70/bbl, but Fed officials still expect
year-end inflation to be materially above the 2% target. Markets price a hike by
September at the latest; July hike probability is about 25%, and several
officials have signaled further tightening.
