Key facts
- Waller said he would back a 25 basis point increase at the December 8-9 meeting even if October CPI improves over September.
- Waller said a 50 basis point hike should be considered if core consumer prices rise 0.3% or more from September.
- Waller said skipping a hike last month was partly justified because policymakers had all but promised further tightening.
- Waller said September PCE inflation was 3.7% and core PCE 3.1% year over year, against a 2% target.
- Waller said more than 70% of core PCE services components rose 3% or more in September.
- Waller said Fed staff analyses suggest energy shocks may push prices up more persistently than before the pandemic.
Federal Reserve Governor Christopher Waller said on November 10, 2026 that he would support a 25 basis point increase in the Fed's policy rate at the December 8-9 meeting, even if government data shows inflation cooled in October. In remarks prepared for delivery in London, Waller said a 50 basis point hike should be considered if core consumer prices rose 0.3% or more from September.
"While I am hoping for an improvement over September, even if this occurs, I would still support a 25 basis point increase in the FOMC's policy rate at our December meeting," Waller said, referring to the October US consumer price index, expected at 8:30 a.m. EST (1330 GMT). Economists polled by Reuters expect core CPI, which excludes food and energy, to have risen 0.2% last month from September.
Waller said anything less than a 0.3% core rise still warrants a hike, and that failing to deliver would hurt the Fed's inflation-fighting credibility given inflation that is too high and appears to be broadening. He said he backed the central bank's decision last month to skip a rate hike in part because policymakers had all but promised further tightening.
Futures that settle to the Fed's policy rate priced about an 85% chance of a hike at the December meeting to a new target range of 4.00%-4.25% as of Monday's close, and a better-than-even chance of another hike as soon as March, Waller said. "If, however, the hikes are not carried out, markets will reduce expectations of rate hikes and rates will immediately fall, which would loosen monetary policy in an undesirable way," he said.
Waller said he expects GDP growth to back off a bit in the current quarter as consumer spending slows, but that output will continue to grow at a solid pace. He called the labor market "solid" despite an unemployment rate of 4.1%, with worker demand and supply in rough balance.
On inflation, Waller said the Fed targets 2% year-over-year PCE inflation, but September's reading was 3.7% and core PCE rose 3.1% from a year earlier. More than 70% of the components of core PCE services inflation rose 3% or more in September, he said.
Waller said he would look at whether the breadth of elevated inflation continues, including whether high-tech goods prices tied to the AI buildout keep rising, and whether higher energy prices are passing through to goods and services. He said recent Fed staff analyses suggest producer prices could continue to rise and that energy shocks may deliver a more persistent push upward to prices than before the pandemic, with pressures possibly persisting well into 2027 if oil prices remain elevated.