Fed Governor Says Iran War Causing More Uncertainty Than Tariffs
PYMNTS.com
Last updated: May 26, 2026
Federal Reserve Governor Christopher Waller stated his stance on future interest rate cuts, indicating a need for inflation improvement or significant labor market deterioration before considering reductions. He emphasized holding rates steady in the near term. Despite inflationary pressures, the U.S. economy shows solid growth driven by business investment in AI and resilient consumer spending.
- Economic Performance: The U.S. economy is growing at a steady 2% pace, supported by strong business investment in artificial intelligence and continued consumer spending. While consumer sentiment is at a record low, retail sales indicate consumers are still spending, despite a declining personal savings rate.
- Inflation Concerns: Waller highlighted concerns about inflation, particularly the broad nature of price increases across various goods and services, including groceries and apparel. He noted that nearly half of monitored categories have seen price increases of 3% or more this year, a historically large share. The impact of ongoing Middle East conflict on supply chains and input costs adds uncertainty to future inflation.
- Consumer Impact: Elevated living costs are becoming ingrained in daily life, leading consumers to change spending and payment habits. Financial stress related to grocery costs has increased, with many households now viewing it as a recurring cash flow challenge rather than a temporary budgeting issue.
