Inflation is likely to continue to ease and possibly allow the U.S. central bank to cut interest rates sooner and faster than expected, Federal Reserve Governor Christopher Waller said on Thursday in comments that pushed against recent market moves that anticipate a shallower Fed rate path.

Financial markets are still concerned about inflation. The Fed influences short-term interest rates, which are falling, but longer-term bonds like the 10-year Treasury are a better reflection of inflation expectations.

The central bank’s recent infusion of financial-market brawn includes Beth Hammack, who worked for three decades at Goldman Sachs.

Fears of elevated interest rates dampened the mood on Wall Street at the start of this year–but cooling core inflation and dovish comments by Federal Reserve governor Christopher Waller have given investors reason to feel a bit more cheerful this week.

Federal Reserve Governor Christopher Waller said the US central bank could lower interest rates again in the first half of 2025 if inflation data continues to be favorable.

Consumer Price Index showed an acceleration to 2.9%, the highest rate since July. With such high inflation, the Fed is unlikely to cut rates in January.

The US Federal Reserve could cut rates three or four times this year if inflation data cooperates, with a first cut possible before July, a senior bank official said Thursday.

The yield on the 10-year Treasury has recently soared toward its highest level since 2023, injecting nervousness into the U.S. stock market that's knocked indexes from their records.

As mentioned, mortgage rates haven't fallen in line with the Fed's rate cuts because they depend on factors beyond the agency's benchmark rate, such as the economy and 10-year Treasury bond yields. For example, when the 10-year treasury rate goes up, mortgage rates tend to follow, and vice-versa.

But minutes from their December meeting suggest that the decision was a close call — and that there is no guarantee policymakers will lower rates again anytime soon. The minutes of the central bank’s Dec.

By Howard Schneider, Ann Saphir WASHINGTON (Reuters) -Inflation is likely to continue to ease and possibly allow the U.S. central bank to cut interest rates sooner and faster than expected, Federal Reserve Governor Christopher Waller said on Thursday in comments that pushed against recent market moves that anticipate a shallower Fed rate path.