Waller Backs December Rate Hike, Hints at Half-Point Move
By @sharedot · · 6 pages
- Finance
- Federal Reserve
- Interest Rates
- Inflation
Fed Gov. Waller backs a December rate hike even if October inflation improves, and would consider a half-point move if it doesn't.
Waller locks in support for a December hike
Federal Reserve Gov. Christopher Waller, speaking in prepared remarks in London Tuesday morning, said he anticipates backing a rate increase at next month's FOMC meeting even if Tuesday's consumer price index print shows inflation improving.
American Banker reports that if October's monthly CPI reading comes in at or above 0.3%, Waller would support "more robust action," saying a 50 basis point hike "should be considered" and that hiking only 25 basis points "would put our credibility at risk."
His declaration all but locks in a move at the committee's final policy-setting meeting of the year.
A reversal from September's hold-and-hike path
The hawkish call is striking because it comes just weeks after the Fed's first increase since 2023.
In September the central bank raised its benchmark rate a quarter point to between 3.75% and 4%, a unanimous vote that Chair Kevin Warsh framed as resolve against inflation running at 3.4% in August, well above the 2% target, amid price pressures tied to the Iran war.
American Banker notes that at October's meeting Gov. Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of a quarter-point increase, and Dallas Fed President Lorie Logan and Minneapolis Fed President Neel Kashkari have also pushed for a more aggressive approach — so Waller's stance shifts a leading voice squarely into that camp.
Markets and the committee already lean toward a hike
American Banker reports that more than 84% of federal funds futures contracts were pricing in a December rate hike as of the end of the day Monday, according to CME Group's FedWatch tool — so traders had largely anticipated this stance.
The vote math remains a question: it is possible for the FOMC to hold rates even with five votes in favor of a hike, but the committee has not implemented a policy rate on a 7-5 split since 1983, per Federal Reserve Bank of St. Louis data cited by American Banker.
September's hike itself passed 12-0, with most participants projecting at least one more increase before year-end.
What Waller is watching and what comes next
Waller said he is concerned not just by the overall price index but by rising categories including core goods and core market-based services excluding housing, which he views as a deeper trend rather than acute supply shocks.
Citing Fed staff research on supplier expectations, he said there is a strong chance end-prices keep climbing, and even a swift end to the Iran war is unlikely to bring immediate diesel relief.
Per American Banker, his baseline is 25 basis points in December even if October inflation improves; a hot CPI print Tuesday would open the door to 50. ABC News notes the September hike already drew criticism from President Trump, who called for lower rates while expressing confidence in Warsh.