Waller backs 25-basis-point December rate hike even if inflation slows
Key Facts
Federal Reserve Governor Christopher Waller said he would support a 25-basis-point interest rate hike at the December meeting even if October inflation showed improvement from September. Reuters quoted him as saying, "Even if that happens, I would still support a 25-basis-point increase in the interest rate at our December meeting." His remarks came ahead of the release of the U.S. Consumer Price Index for October, scheduled for November 10 at 08:30 a.m. Waller’s position gives the upcoming price reading direct significance for the debate over the path of monetary policy, since he did not make continued inflation acceleration a condition for supporting the increase. The Fed kept its target rate range at 3.75% to 4% at its October meeting, while two members preferred a quarter-percentage-point increase.
Waller set a higher threshold that could prompt consideration of a steeper move: he said a rise of 0.3% or more in the core Consumer Price Index in October compared with September could mean a stronger move was needed. He added that a 50-basis-point increase at the December meeting "should be considered" if core inflation reached that level. By contrast, economists surveyed by Reuters expected the core index to rise 0.2% month over month in October. The index excludes volatile food and energy prices, and its monthly forecast compares price changes between October and September, not the annual inflation rate. Waller’s remarks therefore put the October result, when released, at the center of the choice between a quarter-point increase and the possibility of discussing a larger one.
Waller said further monetary policy tightening would be necessary, "sooner rather than later," to put inflation back on a path toward the Fed’s 2% target over the medium term. In describing the economy, he cited a preliminary estimate showing real gross domestic product grew 3.4% in the third quarter of 2026, and said activity was still expanding at a healthy pace. October data he cited showed the unemployment rate fell to 4.1%, while nonfarm payrolls increased by 165,000 during the month. In the latest price data available before October’s release, the Consumer Price Index rose 0.6% in September month over month, after a 0.4% increase in August, and was up 3.7% over the 12 months through September. The Bureau of Labor Statistics attributed more than half of September’s monthly CPI increase to a 9.1% rise in gasoline prices.
In the latest previous annual reading recorded by EL7, inflation was 3.7% in the October 14 release, against a forecast of 3.6% and a previous reading of 3.4%. Bitcoin data available for the previous session showed it closed at $75,368.41 on November 9, compared with a close of $74,851.44 on November 8. In a Reuters report at 00:35 Eastern Time on November 10, Bitcoin rose 0.4% to $74,749.1 as investors awaited inflation data. The report said bitcoin exchange-traded funds recorded outflows of more than $1.2 billion in the previous week, followed by an outflow of $201 million on Monday, November 9. These figures provide context for market activity ahead of the data, while the forthcoming inflation reading remains the near-term test for assessing rate expectations.
In its October meeting statement, the Fed said economic activity was expanding at a solid pace and inflation remained elevated, while reaffirming its 2% target. Monetary policymakers will meet again on December 8 and 9, after Waller said he would support a 25-basis-point increase even if October inflation improved. The Consumer Price Index data due to be published on November 10 will show whether the monthly change in prices is closer to the Reuters forecast for the core index or to the threshold Waller cited. If core inflation reaches 0.3% or more, Waller said a 50-basis-point increase should be considered at the December meeting. If it comes in below that threshold, his stated position will remain support for a 25-basis-point increase even if inflation improves from September.