Fed close to a HOLD by September meeting, chief economist says

• NY Fed President Williams and Fed Governor Waller indicate little urgency to adjust rates, leaning towards a September hold if disinflation persists.
• Waller's remarks, including a 'give disinflation a chance' plea, are seen as dovish, contrasting with earlier hawkish tones from Fed Chair Powell.
• Analysts highlight that higher long-term rates reflect Fed expectations and structural factors like AI investment and energy prices, rather than fiscal instability.
• The market is pricing in a lower chance of a September rate hike, with bond yields pulling back sharply after Waller's comments.

The discussion centers on recent dovish remarks from NY Fed President John Williams and Federal Reserve Governor Chris Waller, suggesting a potential pause in interest rate hikes at the September FOMC meeting if disinflation continues. Analysts interpret these comments as a significant shift, influencing market expectations for a hold, despite some underlying economic complexities and past hawkish signals from Fed Chair Powell.