Fed's Waller: Inflation is too high and doesn't seem to be coming down

• We need to move to a much more restrictive setting
• We need to frontload rate hikes, large increases early
• After we get to neutral, then we can flatten out increases
• As second half of the year comes in, we'll be in better position to move according to data
• I support 75 bps in July and probably 50 bps in Sept
• We need to get inflation under control
• Better to err in on side that inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term expectations might be coming unanchored
• Sees jobs report tomorrow in the region of 275K (consensus is 268K)
• It's not clear we're going to have a recession despite news on GDP
• I think fears of a recession are overblown
• Economy is reasonably strong
• Effect of balance sheet reduction already priced in
• We have a good shot at a soft landing
• We're seeing diveregences between GDP and GDI; it's odd to add 2.5m workers and have GDP go down
• I need to see core PCE come down to 2.5-3% before feeling comfortable on really reducing interest rates
• There's not a chance he would be comfortable with 3% inflation
• Most of the inflation issue is demand-side driven
• If we can slow growth down for 9 months to a year that would be sufficient to get inflation back down without causing a recession

Waller is a hawk is this isn't surprising but the bulls might have hoped for something a bit more measured. The market is pricing in an 87% chance of 75 bps on July 27. It had fallen as low as 50% this week.

My takeaway from both Waller and Bullard is that growth is a bigger part of the equation than they're letting on. If they see a recession it will mean that inflation is tamed, in their eyes.