Signal for interest rate hike from the US Federal Reserve

Stating that household and business spending remains strong despite rising goods costs due to tariffs and the impact of conflicts in the Middle East on energy prices, Waller expressed that the labor market is also stable in line with the Fed's goals.

Stating that the real side of the economy continues to maintain a strong outlook, Waller said, "Therefore, I think the real side of the economy is in good shape. However, I believe we are at a crossroads regarding inflation and monetary policy."

Noting that an upward movement has been observed in core inflation since January, Waller recorded that this increase has accelerated as conflicts in the Middle East affect the production and transportation of oil and other commodities.

Expressing that the high level of core inflation is concerning, Waller said, "So the real question is: will core inflation continue its upward trend, or has it reached a turning point where it will begin to decline toward our 2 percent target? The direction it takes will have very different consequences for the course of monetary policy."

Waller stated that excessive tightening in monetary policy could increase the risk of recession, but that being late against inflation could also lead to negative consequences, as it has in the past.

Emphasizing that the core inflation data to be released this week will be important for monetary policy, Waller said, "If the core inflation data comes in high again this week, the FOMC will need to consider tightening monetary policy in the near term."

Waller emphasized that they are at a crossroads in terms of policy, pointing out that the right step to take will depend on future data.

News Source: 12punto