Federal Reserve Board member Waller is cautious about interest rate cuts, warning of long-term conflict risks
ME News Report, April 18 (UTC+8), Federal Reserve Board member Waller stated that due to the energy shock triggered by the Iran war, he remains cautious about whether a rate cut is needed in the short term and warned that the conflict could have a sustained impact on inflation. Waller outlined two main scenarios in his speech. In the first scenario, if the Strait of Hormuz reopens and trade flows return to normal, officials will be able to ignore the surge in energy prices and shift their focus later this year to a weakening labor market. He said that if this occurs, "I think one outlook is that inflation could continue to fall toward the 2% target, which makes me cautious about current rate cuts and more inclined to support the labor market through rate cuts later this year when the outlook is more stable." However, he warned that oil prices and the overall market are underestimating the risk of prolonged conflict. "In terms of inflation, the risk is that the conflict persists longer."