Fed's Chris Waller open to rate hike if inflation rises

Federal Reserve Governor Chris Waller said he would be prepared to support an interest rate increase at the US central bank’s September 15-16 meeting if new data shows inflation has accelerated.

Waller told Reuters on Thursday that his decision would be strongly influenced by August inflation data. He said he was willing to support holding the policy rate steady if inflation continued moving toward the Fed’s 2% goal, but would consider a rate hike if inflation “comes in hot”.

His comments add him to a group of voting members on the Fed’s 12-member rate-setting committee who have signalled they could support higher rates if inflation does not ease. At the committee’s July meeting, three regional Fed presidents dissented from the decision to hold rates steady and called for an immediate 0.25 percentage-point increase.

Fed Chair Kevin Warsh has not explicitly said he is ready to raise rates, but said last week that the central bank would have “work to do” if inflation did not come down. He also said he did not see current financial conditions as restrictive.

The Fed’s preferred inflation gauge, the Personal Consumption Expenditures price index, was 3.7% in July, down slightly from a three-year high in May but still above the central bank’s long-term 2% target.

The Fed has held rates at 3.50% to 3.75% since December 2025. August employment data and the consumer price index are due before the September meeting.

CME’s FedWatch tool showed markets viewing the odds of a rate increase versus no change as almost even, based on futures investments. New York Fed President John Williams said Wednesday that policymakers needed to “wait and see”.