Fed’s Waller: Growth Outlook and AI Are Driving Bond Yields Higher

Waller's framing matters because it separates the bond selloff from the inflation story that usually drives Fed anxiety. By pointing to growth and AI instead, he implicitly argues the rise in yields reflects optimism about real activity rather than a loss of confidence in price stability — a distinction that shapes how much the Fed needs to react. The open question is whether anchored inflation expectations hold if yields keep climbing, and whether other officials echo this benign interpretation or push back on it.