Bank of America previews the Federal Reserve's October policy meeting press conference: No Q&A session likely, Waller to try to "straddle both sides"
1 hours ago
Against the backdrop of the upcoming Federal Reserve policy meeting, Bank of America (BofA) has issued a forecast, projecting that Chair Waller’s October press conference will follow the brief format of September, lasting around 30 minutes and likely without a Q&A session. BofA notes that if the Fed opts for a rate hike, Waller will face relatively less communication pressure, needing only to emphasize that inflation remains high and broad-based, financial conditions are not sufficiently tight, and the economy and labor market remain robust. His core task will be to avoid appearing overly hawkish to prevent the rate hike from triggering excessive tightening of financial conditions. If the Fed holds rates steady, Waller will need to strongly guard against market doubts about the Fed’s credibility. Facing the strong September inflation data, even when focusing on trends rather than individual data points, it is hard to shake off suspicion of complacency on inflation, as it was precisely similar trends that led to the September rate hike. If Waller is unwilling to guide the quarterly rate hike pace to lock in a December rate hike, the market may see a repeat of yield curve steepening distortion, a weaker U.S. dollar, and risk asset sell-offs. Finally, BofA maintains its judgment that the Fed will raise rates in December 2026 and March 2027 respectively; it also stresses that if inflation stickiness exceeds expectations in the first half of 2027, further rate hikes cannot be ruled out.
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