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He noted that market participants are dropping hints about the need for more fiscal discipline, clearly indicating expectations for improved deficit management. Waller asserted that the Federal Reserve cannot step in to buy bonds due to the rules established by Congress, emphasizing the Fed's constraints in navigating fiscal issues.
Future Rate Cuts: Assessing Economic Conditions
Governor Waller shared his thoughts on potential rate cuts, situating them in the context of a resilient economy. He reported that economic indicators are notably positive, with little impact yet from ongoing tariff discussions. Waller highlighted an optimistic outlook for the second half of the year if tariffs can be contained closer to 10%, allowing for some clarity in trade negotiations.