Fed's Waller: Supports 75 bps hike but would go higher if retail sales and housing strong

• I support another 75 bps in July. If retail sales and housing data come in "materially stronger than expected", I would lean towards a larger July rate hike
• I expect hikes to continue after July at a pace that's dependent on incoming data
• After July, further increases will be restricting demand
• I expect policy to be restrictive until there has been a sustained reduction in core PCE 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
• A soft landing is 'very plausible' based on strong labor market
• Fed must be 'utterly focused' on inflation fight
• Very strong labor force data does not show weakening
• June inflation report a 'major league disappointment'

The retail sales report is due out tomorrow and it just got a whole lot more important. The consensus is for a 0.8% increase to headline and a 0.3% increase to the all-important control group.

As for housing we get NAHB index (Mon) housing starts (Tuesday), existing home sales (Wed). The consensus numbers aren't showing any deterioration, which is a surprise to me given some of the recent commentary.

Since his comments, the odds of 100 bps have fallen to 53% from about 68%. That's helped to lift risk assets and weighed on the dollar.

Here's the exact quote: "If that data come in materially stronger than expected, it would make me lean towards a larger hike at the July meeting."

More:

• Inflation expectations data before the next meeting will help shape my view on the size of the hike needed in July.=

"I pay attention to both surveys of the public's inflation expectations and measures of inflation expectations derived from trading of inflation-indexed securities. I prefer the latter market-based measures, which are down from recent peaks but still elevated. The Board staff combines various surveys and market-based measures in our Index of Common Inflation Expectations, which has moved up slightly in recent months after being flat for a long time. We need to avoid expectations rising so much that they become a factor that drives inflation higher."