Waller: Rising bond yields support Fed tightening

Speaking at the Bloomberg New Economy Forum in New Delhi, Waller noted that higher bond yields are restricting demand in interest rate-sensitive sectors such as housing and automobiles. He emphasized that while this is not a direct objective of the Fed, it is easing part of the tightening burden carried by monetary policy.

Bond yields reaching multi-year highs in the United States and other advanced economies have also reduced expectations for additional interest rate hikes by central banks. According to Bloomberg data, the total amount of rate increases priced into swap markets across eight major economies has declined by approximately 200 basis points since mid-September.

In remarks last week, Waller indicated that further interest rate hikes might be necessary to bring inflation back to the Fed's 2% target, while emphasizing that policymakers have flexibility regarding the timing of future decisions.