EL7.AI
Central BanksMedium•10 November 2026•
4 min read

Waller Backs 25-Basis-Point December Rate Hike, Leaves Door Open to a Larger Move

Key Facts

1Waller said he would support a 25-basis-point rate hike at the December meeting.
2Waller said a 50-basis-point increase should be considered if core inflation rises 0.3% or more.
3The headline consumer price index rose 0.4% in October, while the core index rose 0.3%.
4The probability of a December rate hike reached 89% on November 10.
5GDPNow's estimate of annualized growth in the fourth quarter rose to 3.5% on November 9 from 3.4% on November 4.

Federal Reserve Governor Christopher Waller said in prepared remarks for delivery in London on November 10 that he would support a 25-basis-point rate hike at the December meeting, even if October data showed an improvement in inflation. His stance makes a rate increase an explicit option for him ahead of the Federal Open Market Committee meeting scheduled for December 8 and 9. But he tied the size of the move to the price reading, saying a larger increase may be needed if core inflation accelerates. Waller said, "I will continue to support a 25-basis-point increase in the policy rate set by the committee at the December meeting." His remarks came as October data showed headline inflation slowing, while remaining above the Reuters poll estimate.

Waller said a rise of 0.3% or more in core consumer prices from September would put a larger increase on the table in December. He added, "If core consumer prices rise 0.3% or more from September, a stronger policy move may be needed. In that case, I believe a 50-basis-point increase in the policy rate should be considered at the December meeting." The core index, which excludes food and energy, rose 0.3% month over month in October, the same rate recorded in September and August. The headline index rose 0.4% in October, after a 0.6% increase in September. October's reading was above the Reuters poll estimate of 0.3%, keeping markets focused on persistent price pressures despite the slowdown in the headline measure.

In earlier data Waller cited in discussing inflation, the personal consumption expenditures price index rose 0.5% in September and 3.7% in the 12 months through that month. The core PCE index rose 0.3% monthly and 3.1% annually in September. Waller described inflation as "too high" and said it was his focus, while describing the labor market as solid, with labor supply and demand roughly in balance. He also said economic activity was strong and the labor market stable, but inflation remained well above the Federal Reserve's 2% target. These indicators frame his position that a rate increase should remain an option even as some price readings improve.

On economic activity, the Atlanta Federal Reserve's GDPNow model estimated real gross domestic product growth in the fourth quarter of 2026 at an annual rate of 3.5% in its November 9 update. The estimate rose from 3.4% on November 4. The Atlanta Fed describes the figure as a running estimate of growth, not an official bank forecast. Meanwhile, the Associated Press said rising gasoline prices and supply disruptions linked to tariffs and global turmoil, along with strong consumer and business spending, are adding to concerns that inflation will persist. These signals put the strength of activity and sources of price pressure at the center of the debate over the December decision.

Markets moved toward expectations of tighter monetary policy after the price data and Waller's remarks. The yield on the 2-year U.S. Treasury note rose 19.07 basis points to 4.738% in trading on November 10. The dollar index also climbed 0.51% to 102.20, while the euro fell 0.48% to $1.117. The probability of a December rate increase, according to CME FedWatch, rose to 89% on November 10. Interest-rate futures had priced in a probability of about 85%, based on Monday's closing prices, of a hike to a target range of 4.00% to 4.25% at the December 8 and 9 meeting.

The Associated Press reported that stock prices fell at the start of Tuesday trading, while Treasury yields rose amid expectations of more persistent inflation and higher Federal Reserve interest rates. The moves in yields and the dollar followed an inflation reading that exceeded the Reuters poll estimate, while the core index remained at its previous monthly level. Markets are watching initial jobless claims due November 12 for the week ended November 7, with an estimate of 195,000 claims versus a previous reading of 189,000. The U.S. Bureau of Labor Statistics also scheduled the release of its October producer price index for November 13 at 08:30 a.m. local time listed in the bureau's calendar. These data will precede the Federal Open Market Committee meeting on December 8 and 9, at which Waller said he would support an increase of at least 25 basis points if inflation remained the central concern.