Fed Governor Waller pushes for a December rate hike after core inflation prints at 0.3%, with Commerzbank analysts confirming expectations for further monetary tightening.
Fed Governor Waller called this morning for at least a 25-basis-point hike in December and said 50 basis points should be considered after core inflation came in at 0.3%. Commerzbank also expects a December hike, making higher US rates and a stronger dollar more likely into the FOMC meeting.
Sticky US inflation at 0.3% monthly core and Waller's call for a December hike, potentially 50 basis points, push US rate expectations higher relative to the euro area, which weighs on EUR/USD from the dollar side.
A top Fed governor calling for a December hike, with 50 basis points discussed, after 0.3% monthly core inflation supports expectations of tighter policy for longer, which typically pushes Treasury yields up.
Federal Reserve Governor Christopher Waller is advocating for at least a 25-basis-point rate hike in December following a 0.3% monthly core inflation reading. Commerzbank analysts maintain their expectation for a 25-basis-point increase, noting that current economic conditions and low unemployment necessitate further tightening to curb persistent inflation.
Top Fed officials and Commerzbank now point to another rate hike in December, and higher expected US rates tend to lift the dollar.
Higher expected US rates make the dollar more attractive, which is a headwind for EUR/USD in the run-up to the December Fed meeting.
Expectations of another Fed hike in December raise expected short-term rates, which tends to lift the 10-year Treasury yield.