Aurelia Butler

WASHINGTON (Reuters) – Federal Reserve Governor Christopher Waller, whose views are often a bellwether for U.S. monetary policy, said on Monday that with inflation still forecast to fall to 2% he is inclined “at present” to support another interest rate cut later this month.The comments from a key US rate-setter led investors to boost expectations for a rate cut at the Fed’s December 17-18 meeting to nearly 75%, and pushed down yields on the two-year Treasury note.”Policy is still restrictive enough that an additional cut at our next meeting will not dramatically change the stance of monetary policy and allow ample scope to later slow the pace of rate cuts, if needed, to maintain progress toward our inflation target,” Waller told a central bank symposium organized by the American Institute for Economic Research.Fed officials are nearing the blackout period for public comments ahead of the December meeting. Atlanta Fed President Raphael Bostic on Monday said he did not consider the outcome of that gathering “preordained.” New York Fed President John Williams in his prepared remarks did not address the December question but said that he expects the Fed will need to cut rates further “over time.”Fed Chair Jerome Powell is set to add his voice to the debate with public remarks in New York on Wednesday.Both Waller and Bostic said data on inflation, jobs, and consumer spending, issued between now and the Fed meeting, will be important in deciding if rates should be cut as expected or not.”All of that information will help me decide whether to cut or skip. As of today, I am leaning toward continuing the work we have started in returning monetary policy to a more neutral setting” with continued rate cuts, said Waller, a key voice in shaping the Fed’s response to inflation that erupted to a 40-year high in 2022.DATA MATTERSThe Fed began reducing interest rates in September with a half-point reduction, following that with a quarter-point cut in November.A further quarter-point cut in December has been expected, but recent inflation data raised concern that progress may have stalled. One key measure, the personal consumption expenditures price index stripped of food and energy costs, has been mired in a range from 2.6% to 2.8% since May, well above the Fed’s 2% target.”If the data we receive between today and the next meeting surprise in a way that suggests our forecasts of slowing inflation and a moderating but still-solid economy are wrong, then I will be supportive of holding the policy rate constant,” Waller said.Waller said rates are also likely to continue falling next year, though the pace and degree of reduction remain to be determined. The Fed will issue new economic projections at its next meeting to show how far officials expect to cut their benchmark rate next year.The rate is currently set in a range between 4.5% and 4.75%. “The evidence is strong that policy continues to be significantly restrictive and that cutting again will only mean that we aren’t pressing on the brake pedal quite as hard,” Waller said. “I expect rate cuts to continue over the next year until we approach a more neutral setting of the policy rate.”Recent data “tells a fairly consistent story over the past year about moderating demand relative to supply, consistent with continued progress toward 2% inflation and without an undesirable weakening in the labor market,” said Waller, a fitness buff who compared the Fed’s battle with inflation to a mixed martial arts fighter in that sport’s unique arena.”Let me assure you that submission is inevitable – inflation isn’t getting out of the octagon,” Waller said. More

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(Reuters) – A look at the day ahead in Asian markets. Investors in Asia go into Tuesday’s session with a spring in their step following the upswing in global stocks and risk appetite on Monday, but wary that the buoyant U.S. dollar can extinguish that optimism in a flash.Also keeping regional sentiment in check will be unease around China’s economic predicament, even though purchasing managers index data over the last 72 hours showed that factory activity in November expanded at the fastest pace in months.Much of that – the pickup in Chinese manufacturing activity, deepening disquiet about the outlook, and the dollar’s renewed vigor – is tied to U.S. President-elect Donald Trump’s hardline stance on trade and threats of heavy tariffs when he takes office next month.His social media broadside on Saturday to countries contemplating backing away from the “mighty” U.S. dollar appears to have had an initial effect. Excluding Nov. 6, the day after the U.S. election, the dollar’s 0.6% appreciation on Monday was its biggest rise in six months. Europe’s economic and political travails, especially in France, are certainly at play, while the yen is drawing support from bets that the Bank of Japan could raise interest rates later this month.But the dollar’s independent strength cannot be ignored, and bullish sentiment toward emerging markets is rarely sustained for long when the dollar is on the march.Nor can China’s weakness be ignored. Some analysts say the positive PMI surprises are due to a ramp up in production before tariffs from Washington are levied, and China’s underlying economic health remains fragile.China’s bond market would appear to back up that assertion. The 10-year yield on Monday fell below 2% for the first time, while the 30-year yield is now below its Japanese equivalent for the first time in at least 20 years.Still, investors will draw comfort from the S&P 500 and Nasdaq’s rise to fresh peaks on Monday, and U.S. Federal Reserve Governor Christopher Waller saying he is leaning toward a rate cut later this month.Remarkably, after Monday’s spike the S&P 500 has registered more than 50 record highs this year. But will that be enough to lift Asian markets on Tuesday? Asia’s calendar on Tuesday is light, with South Korean inflation the only major economic indicator on tap. It is one of several CPI releases this week following Indonesia’s on Monday and ahead of the latest snapshots from the Philippines, Taiwan and Thailand later in the week.Economists polled by Reuters expect South Korea’s annual rate of headline inflation in November to accelerate to 1.7% from a three and a half year low of 1.30% in October. That would mark the biggest jump since August last year.Here are key developments that could provide more direction to markets on Tuesday:- South Korea consumer inflation (November)- Bank of Thailand governor Sethaput Suthiwartnarueput speaks- Thailand’s finance minister Pichai Chunhavajira speaks More

NEW YORK (Reuters) – Federal Reserve Bank of New York President John Williams said on Monday the U.S. central bank is likely to lower its interest rate target further over time as inflation pressures continue to cool. “Monetary policy remains in restrictive territory to support the sustainable return of inflation to our 2 percent goal,” Williams said in the text of a speech to be delivered before a gathering of the Queens Chamber of Commerce, held in New York. Looking ahead, “I expect it will be appropriate to continue to move to a more neutral policy setting over time,” Williams said, adding “the path for policy will depend on the data. If we’ve learned anything over the past five years, it’s that the outlook remains highly uncertain.” Williams offered no firm guidance about the timing of rate cuts and whether he believes the Fed will lower its interest rate target, now set at between 4.5% and 4.75%, at the Federal Open Market Committee meeting this month. Markets have braced for more rate cuts amid guidance of easier policy from central bank officials, but new uncertainties over President-elect Donald Trump’s policies have clouded that outlook. In a speech Monday, Fed Governor Christopher Waller said “at present I lean toward supporting a cut to the policy rate at our December meeting” depending on how the data come in. In his remarks, Williams said the economy is in a “good place” and the labor market is “strong.” He sees inflation continuing to ebb to the 2% target over time but warned the process could be uneven. The official said the economy should grow by 2.5% this year or maybe more, with the unemployment rate between 4% and 4.25% “over coming months.” Williams said inflation should be 2.25% for the year and said the job market was unlikely to be a source of upward price pressures. More

“[A]t present I lean toward supporting a cut to the policy rate at our December meeting. But that decision will depend on whether data that we will receive before then surprises to the upside and alters my forecast for the path of inflation,” Waller said in prepared remarks at a conference on the Fed’s framework review in Washington sponsored by the American Institute for Economic Research.The Fed governor acknowledged signs of stalling inflation, but said there was “no indication that the pace of price increases for key service categories such as housing and non market services should remain at their current levels or increase.”Still, the decision to back a rate cut at the Dec. 17-18 meeting would “depend on whether data that we will receive before then surprises to the upside and alters my forecast for the path of inflation.”Looking ahead to data later this week included the nonfarm payrolls report due Friday, the Fed governor said he expected to see a rebound in job gains for November.Following the hurricane-related hit to job gains in October, Waller said he expects to see a “rebound” in the November employment report.If the incoming data between today and the next meeting, however, “surprisingly suggests our forecast of slowing inflation and a moderating the still solid economy are wrong, then I’ll be supportive of holding the policy [rate],” Waller addded.  More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe Canadian province of Ontario has launched a multimillion-dollar advertising campaign promoting economic and cultural links with the US in an effort to counter president-elect Donald Trump’s threat to impose 25 per cent tariffs on all goods from Canada.With grainy second world war pictures, footage of Niagara Falls and images of numerous bridges between the province and the US, the 60-second ad reminds Americans how Ontario is their third-largest trading partner and the top export destination for 17 states.“For generations, this ally to the north has been by your side: Ontario, Canada, a partner connected by shared history, shared values and a shared vision for what we can achieve together,” the ad states.Although the US has a free trade agreement with Canada, as well as Mexico, Trump accused the two countries of permitting illegal migration and drug trafficking across their borders, saying that he would impose 25 per cent tariffs “on ALL products coming into the United States”. With C$3.6bn (US$2.6bn) in goods and services crossing the border daily — $1bn of this to and from Ontario — a 25 per cent tariff would have devastating consequences for both countries, said Daniel Tisch, chief executive of the Ontario Chamber of Commerce.Show video info“It would disrupt supply chains, drive up manufacturing costs, reduce exports, erode investor confidence and fuel job losses, particularly in Ontario and the border states,” he said.Ontario has a population of about 16mn people and is a hub for manufacturing, agriculture, technology and innovation. The province is also home to Canada’s automotive industry which is deeply integrated with the US market. Its trade with the US was worth C$493bn in 2023.The province’s premier, Doug Ford, has been one of Canada’s most outspoken leaders on relations with the US since Trump won the presidential election.He urged the federal government in Ottawa to negotiate a bilateral trade agreement with the US that cuts out Mexico, which he described as a “backdoor” for China into North America.Ford last week said: “For months, Ontario has been pushing the federal government to show that Canada understands, cares and is responsive to US security and economic concerns, including by urging them to match US tariffs on China.”Prime Minister Justin Trudeau on Friday evening flew to Florida to meet Trump at his Mar a Lago resort in an effort to head off the tariffs.Following the meeting Trump said in a Truth Social post that the leaders discussed the flow of fentanyl and illegal immigrants across the southern US border, as well as energy, the Arctic, “Fair Trade Deals that do not jeopardise American Workers, and the massive Trade Deficit the US has with Canada”.Ford’s spokesperson said the province’s ad is set to air this month on various US online streaming services, including Fox News platforms, and will run into the new year ahead of Trump’s January 20 inauguration. More