[Former Fed Vice Chair: Waller's Speech Reverses Previous Fed Logic, Default Choice Now is Rate Hike] Jin10 News, August 30 – 'Fed Whisperer' Nick Timiraos wrote that Federal Reserve Chair Waller has alleviated some concerns about his strategy to combat inflation but has also set the stage for a potentially greater test in three weeks. If the Fed raises rates, it could anger the White House just weeks before the midterm elections. If it holds steady, it might reignite the doubts that his speech sought to quell. Two points in Waller's Friday speech particularly suggest that the Fed may raise rates next month. The first is that Waller finds it difficult to describe current financial conditions as restrictive. The second is that the relatively favorable inflation data over the summer has not convinced him that the underlying trend is improving. Before Friday, the Fed's default choice was to hold steady unless the data strongly supported action. Former Fed Vice Chair Cohn stated that Waller's speech has reversed this logic. 'He has changed the original assumption; now it’s unless the data shows no need, they will raise rates.' This means the final decision will depend on developments before the September meeting, especially the August CPI data to be released on September 11. Cohn noted that if the data indicates no need for action, the Fed should not raise rates; if the data is strong, it could weaken the argument that inflation is trending back toward the Fed's 2% target.