WSJ's Norman: Source tells me the draft “deals” circulating are inaccurate

Thank you, Jens, and thank you to the European Central Bank for the opportunity to speak to you today.1 Like other central banks, the Federal Reserve is confronted with how to respond to the effects of the conflict in the Middle East, which has constrained supplies and raised prices for petroleum and other goods. While I am hopeful that the conflict is on a path toward a peaceful resolution, it is unclear how long these supply disruptions and their economic impact will last, and that has become one of the biggest questions for the U.S. economy and the path of monetary policy. What does this mean for the Fed's dual mandate? As I will explain, while I still harbor concerns about the strength of the labor market in the United States, because of the growing length of the conflict, I have become more concerned that higher energy prices may have a lasting effect on inflation. A year ago, when higher import tariffs raised goods prices, I still supported reducing the Federal Open Market Committee's (FOMC) policy rate because of my expectation that this one-time increase in prices would not have a lasting impact on inflation. That appears to be the right call. And while I was initially hopeful that the Middle East conflict would be quickly resolved and that the FOMC could similarly look through the effects on prices, uncertainty over the conflict and how the energy shock will spread to other prices led me to support a pause in rate cuts at the FOMC's last meeting in April. Over the past several weeks, data on the labor market and inflation have validated this judgment. Recent jobs data show that the labor market appears to be stabilizing and the unemployment rate is fairly low and stable. But higher energy and commodity Fed's Waller: I don’t think the Fed should consider hikes in the near future. FED'S WALLER SAYS TO TAKE OUT EASING BIAS BUT IS NOT IN FAVOR OF A RATE HIKE RIGHT NOW. The highlights: Ditch the easing bias, don't rule out hikes "if inflation does not abate soon." "I have become more concerned that higher energy prices may have a lasting effect on inflation." "Inflation is not headed in the right direction. Based on this recent data, I would… Waller's worry is around inflation expectations after a series of overlapping positive price shocks: "A risk that is getting more real every day is that the longer the energy price shock continues, the greater the chance that these increases bleed into prices for other goods and…