Waller backs 25-basis-point rate hike in December if inflation improves as expected

Key Facts

Christopher Waller, a member of the Federal Reserve Board of Governors, said in a speech delivered on 10 November that he would support a 25-basis-point rate increase at the December meeting if inflation improves as he expects. His position puts the price outlook at the center of the debate over the central bank’s next move, as Waller said inflation remains well above the Federal Open Market Committee’s 2% target. He described inflation as his primary focus when considering further monetary tightening. He tied his support for an increase to the expected price path, while keeping his position conditional on the data. The committee is scheduled to hold its next meeting on 8 and 9 December 2026, with the press conference set for 9 December.

Waller left open the possibility of a move larger than a quarter point if inflation comes in higher than expected. Reuters quoted him as saying that a 0.3% or greater increase in the core consumer price index in October compared with September could mean that “a stronger policy move may be necessary.” This condition makes the next price reading a factor in assessing the size of the increase he might consider appropriate. His position went beyond favoring a rate hike: he also tied the size of the move to the extent of the inflation increase. The Fed’s October statement described economic activity as expanding at a strong pace, while inflation remained elevated.

Available price data indicate that inflation remained above target. The Bureau of Economic Analysis release for September showed that the personal consumption expenditures index, the inflation measure tracked by the Fed, rose 3.6% year over year, compared with a 3.4% increase in August. The difference between the two readings puts September’s annual inflation rate above the previous month’s level. This reinforces the importance of Waller’s condition that inflation improve before he supports the expected increase. The October reading to which his condition on the core index referred had not yet been released when the bureau set the date for its next report.

Waller, by contrast, cited signs that economic activity and the labor market remained strong. He said the advance estimate showed real gross domestic product grew 3.4% in the third quarter, supported by consumer spending and business investment. He added that the unemployment rate edged down to 4.1% in October. Nonfarm payrolls also increased by 165,000 during the same month, and 85,000 jobs were added to estimates for the prior two months. These figures provide context for the Fed’s balancing of strong economic activity against inflation that remains above its target.

The Bureau of Economic Analysis set 25 November 2026 as the release date for its October personal income and outlays report, at 8:30 a.m. Eastern time. The report’s release would add a new reading to the assessment of the price path ahead of the committee’s December meeting. It will come after Waller’s 10 November speech and before the meeting scheduled for 8 and 9 December. Waller said his support for a 25-basis-point increase depends on inflation improving as he expects. The possibility of a larger move remains conditional on a core index reading that reaches or exceeds the threshold he cited.