Fed’s Waller: Did not shift 'dot' on rate hike view – Bloomberg

“Unemployment rate would have to drop fairly substantially, or inflation would have to stay high, to have a 2022 rate hike,” Fed Governor Christopher Waller said on Tuesday’s Bloomberg TV Interview, per Reuters.

The Fed policymaker also said, “If you think you may need to raise rates by end-2022 or early 2023, you need to get tapering done before then.”

Additional comments…

Has a very optimistic outlook for the economy.

Will not say when he expects Fed rate liftoff.

Inflation expectations seem anchored.

Labor market hasn't quite come back.

Still a long way off of pre-covid labor market.

Prefers market-based measures of inflation expectations to survey-based ones.

This year has been a surprise, economy has made better progress than anticipated.

There's a lot to decide about a potential taper, and wide range of views on timing, pace, sequence.

In favour of tapering MBS before Treasuries, tapering MBS is an easier sell to the public as the housing market is hot.

Seeing tremendous increase in productivity.

It's appropriate to start thinking about pulling back on some of the stimulus.

Inflation for next few months will be running way above our target.

FX implications

Although Fed’s Waller add to the market’s anxiety over inflation and rate-hike, S&P 500 Futures remain mostly unaffected around 4,284, after refreshing the record top, by the press time. The reason could be traced from the cautious sentiment ahead of the day’s key data, namely China PMI and US ADP Employment Change.

Read: AUD/USD: Bears attack 0.7500 on Australia's coronavirus woes, China PMI eyed