Fed's Waller favors a December rate hike, welcomes a half-point increase if inflation runs hot

Federal Reserve Governor Christopher Waller said on Tuesday that he is leaning toward a quarter-point rate hike in December and is open to a half-point move if inflation runs hot.

Waller spoke in London a few hours before the release of the October consumer price index (CPI). He would back the quarter-point hike even if inflation improves, he said. But if core CPI, which leaves out food and energy, rises about 0.3% or more for a third straight month, he believes a half-point hike "should be considered at the December meeting."

He added: "Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take."

The October CPI report is due this morning, and is one of the last inflation readings before the Fed meets on December 8-9.

Waller voted with the majority to hold rates in October. He said the Fed's own signals had already led markets to price in hikes, so the timing mattered less than delivering them within a reasonable time. If the hikes never come, he warned, rates would drop and policy would loosen.

He was candid about inflation: "September's inflation data were bad. There was no silver lining." The Fed's preferred gauge, the personal consumption expenditures (PCE) price index, was up 3.7% from a year earlier, and its core measure 3.1%.

He also pointed to new Fed staff research. It suggests that high energy prices could feed into core inflation more than in the past and keep pushing it up well into 2027.

At its October 28 meeting, the Fed held its rate range at 3.75%-4.00% in a 10-2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, preferring a quarter-point hike.

Sources & Further Reading

1. "The Economic Outlook and Some Thoughts on Labor Market Dynamism." Federal Reserve Board. November 10, 2026.
2. "Federal Reserve issues FOMC statement." Federal Reserve. October 28, 2026.