Waller: Fed Focused on Inflation, More Hikes Possible
Fed Governor Waller says policy will focus on inflation for now and he anticipates additional rate hikes if data meet expectations, after September's quarter-point increase.
What you need to know
Fed Governor Christopher Waller said the labor market is stable but inflation remains too high, and he expects additional policy-rate hikes if data continue as expected. The FOMC raised rates 25 basis points in September.
- The FOMC raised the policy rate by 25 basis points to 3.75–4% in September.
- Waller said core PCE inflation was 0.25% in August and 3% over 12 months.
- He anticipates additional hikes if data come in as expected, with flexibility on timing.
What changed since the September meeting
Waller said the economy looks roughly the same as at the September FOMC meeting. He described September jobs data as showing a solid and stable labor market, with the unemployment rate relatively low and near the median of policymakers' longer-run projections. Payroll gains were in the range estimated as breakeven for a steady unemployment rate, he said.
Inflation progress and the policy outlook
Inflation remains the main concern. Waller cited monthly core PCE inflation of 0.25% in August and a 12-month change of 3%, and said 12-month core inflation has been between roughly 2.5% and 3.0% since spring 2024. He said policy will focus on the inflation side of the Fed's mandate for at least the near term.
Waller said he anticipates additional hikes to support a timelier return of inflation to 2% if data continue as expected, but said the timing is flexible and hikes need not come at consecutive meetings. The Summary of Economic Projections showed 16 of 18 participants anticipated at least one more hike this year, with four expecting two.
How many more rate hikes does Waller anticipate this year?
He does not specify a number, but says he anticipates additional hikes if data continue as expected. The SEP showed 16 of 18 participants expected at least one more hike this year.
Sources & context
- Speech by Governor Waller on the economic outlook ↗federalreserve.gov
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