Fed's Barr warns rate hike possible if inflation stalls

U.S. markets rallied and global bond yields fell after Fed Governor Christopher Waller signaled he would prefer holding the federal funds rate steady if upcoming inflation readings keep cooling, while noting that a modest re-acceleration could still warrant tightening. Other Fed officials remained more hawkish, with Fed Chair Kevin Warsh and Fed Governor Michael Barr indicating they could support rate hikes if inflation fails to ease further, keeping markets focused on near-term CPI and PCE data. Separately, Türkiye’s central bank was expected to keep its policy rate unchanged at its September meeting after inflation eased only slightly in August, with economists looking for possible cuts in October and December as funding normalization and repo auctions resume. New Zealand’s Reserve Bank, after raising rates again this week, was viewed as more likely to wait until December for any further hike. In Canada, investors increased expectations that the Bank of Canada will resume tightening in December and beyond, lifting implied peak rates to around 3%.