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Waller, Monetary Policy at a Crossroads

Federal Reserve (Speeches & Testimony)

Jul 13, 2026

7/13/2026

Core Inflation Is Broad, Persistent, And Becoming Endogenous To The Domestic Economy Beyond Oil Or Tariff Shocks

Waller, Monetary Policy at a Crossroads · Federal Reserve (Speeches & Testimony)

Business, Finance & Industries · Jul 13, 2026

Waller warns that inflation is becoming broader and more persistent—core PCE rising to 3.4% driven by widespread strength across core goods and services—so fading oil prices alone won’t necessarily bring inflation back down.


7/13/2026

Fed Policy Remains Data-Dependent On Core Inflation Rather Than Growth, Likely To Stay Restrictive Or Tighten If Core Inflation Remains Elevated

Waller, Monetary Policy at a Crossroads · Federal Reserve (Speeches & Testimony)

Business, Finance & Industries · Jul 13, 2026

Waller says near-term Fed policy will be data-contingent and focused on core inflation—not growth—so with a resilient economy and balanced labor markets, several months of lower core inflation would justify holding rates but any hot core print could force tightening, meaning policy is likely to stay restrictive (or tighten) unless labor markets materially worsen.


7/13/2026

Fed Should Not Mechanically Recreate 2022 Tightening Because Labor Market Slack Has Diminished And Inflation Expectations Are Anchored, But Further Hikes Remain Possible

Waller, Monetary Policy at a Crossroads · Federal Reserve (Speeches & Testimony)

Business, Finance & Industries · Jul 13, 2026

Fed Governor Waller warns against mechanically replaying the 2022 tightening script because a much tighter labor market (vacancies per unemployed down from ~2:1 to ~1:1) and more-anchored short-term inflation expectations (2‑yr TIPS 2.1%, 5‑yr 2.3%) raise the risk that aggressive further hikes would damage jobs or trigger recession, so the bar for sustained aggressive tightening is higher though hikes remain possible if inflation stays hot.


7/13/2026

AI Investment Creates A Distinct Inflation Channel That Supports Growth While Prolonging Core Goods Inflation

Waller, Monetary Policy at a Crossroads · Federal Reserve (Speeches & Testimony)

Business, Finance & Industries · Jul 13, 2026

AI investment is acting as a distinct inflation transmission channel—component shortages and upstream cost pass-through in semiconductors, servers, memory and storage are creating sector-specific price pressure that can reverse prior disinflation in tech-related goods, meaning strong AI capex may boost growth and earnings while prolonging core goods inflation and keeping monetary policy tighter for longer.