Fed's Waller says hikes need not come at consecutive meetings

According to the text cited by The Globe and Mail, Waller wrote that he expects further hikes to bring inflation back to the 2% target in a more timely way. In the same text he stressed that the hikes need not come at consecutive meetings. The Fed's policy rate has been at 3.75–4.00% since a 25 basis point hike in September, and inflation is more than 1 point above target. InvestingLive reports that Waller noted inflation has been above target for about five and a half years. He judged the labour market solid and stable despite slower hiring in September.

The speech makes room for a pause in October without changing the direction of tightening. InvestingLive says markets put the odds of an October hike at about 20% and expect at least three hikes by the end of 2027, taking the policy rate to 4.50–4.75%. Data cited by FXStreet put the October odds at about 18% and December at 87%. Weekly jobless claims, released the same day, came in at 197,000, below the expected 200,000.

The venue also stands out. At the same forum, Bank of England Governor Bailey urged governments to restore confidence in public finances. When the Fed and the BoE deliver messages of tightening and fiscal discipline at a meeting hosted by an emerging market central bank, the channel is plain. Higher dollar rates feed directly into emerging market pricing, including Turkish lira assets.