Federal Reserve Governor Christopher Waller stated on May 22, 2026 that he favors holding the federal funds rate steady for the near term, marking a significant shift from his more accommodative stance months earlier. Two main factors explain this caution: tariff-driven inflation and energy price pressures linked to the Middle East conflict. Waller indicated that the odds of a rate cut are now roughly equal to the odds of a rate hike, depending on where inflation data lands. Core inflation currently runs between 3.5% and 3.75%, well above the Fed’s 2% target.
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