Waller says inflation risks have exceeded employment risks, market focuses on July CPI

On July 7, Federal Reserve Governor Waller said that the U.S. labor market has stabilized, while inflation has accelerated again. The current inflation risk has exceeded the employment risk, which has been completely reversed compared with policy considerations a year ago. He pointed out that interest rate cuts were supported last year due to the weak job market, and now the policy focus should shift back to curbing inflation. Markets are now turning their focus to the June CPI released on July 14, the last key inflation data before the Federal Reserve meeting on July 28 - 29. Although international oil prices have fallen back to about US$70/barrel, Fed officials still expect inflation to be significantly higher than the 2% target by the end of the year. The market expects the Federal Reserve to raise interest rates in September at the latest, and the probability of raising interest rates in July is about 25%. Many officials have signaled further policy tightening.