Waller leans toward a December rate rise even if inflation eases
Investors in bond and stock funds face uncertainty over the Fed’s December decision as officials await more inflation data.
CNBC reported on Nov. 10 that, speaking in London, he said he “is leaning toward” an increase even if the October data comes in softer than expected.
CNBC reported on Nov. 10 that the Federal Open Market Committee had passed on an October hike because “the accumulation of more information” would help guide the policy path.
Free Malaysia Today reported on Nov. 10 that Waller put the point more plainly: “Even if, as I expect, the monthly rate of inflation improves in October, I am leaning toward supporting an increase in our policy rate of 25 basis points at the FOMC’s December meeting,” Waller said.
That cuts against the committee’s recent public posture. Since the October decision, multiple Fed officials have continued to counsel patience while emphasizing the need to bring inflation back to the central bank’s 2% target, CNBC reported on Nov. 10.
Waller’s explanation for the earlier hold makes the new language harder to treat as idle talk. A same-day account said Waller supported the Fed’s decision to leave rates unchanged at the October meeting partly because policymakers had all but promised further tightening and because markets had already priced it in.
The same logic turns inaction into a cost. TradingView reported on Nov. 10 that Waller warned failing to act would cause markets to pare back rate expectations and send rates lower immediately, effectively loosening policy in an undesirable way. On those reports, he framed a pause as a policy move of its own.
The recent record gives him room to argue that he is completing earlier restraint rather than starting a fresh squeeze. A same-day account said the Fed unanimously agreed in September to raise rates by 25 basis points, lifting the benchmark target range to 3.75%-4%, and said Waller believed the Fed should at least unwind last year’s three precautionary rate cuts.
His argument still depends on inflation looking wrong enough to make patience expensive. Times Now reported on Nov. 10 that Waller favored a quarter-percentage-point increase but was open to a larger move if incoming inflation data proved significantly worse than expected.
Counsel Patience
Patience has evidence behind it, and the committee has not run out of incoming data. CNBC reported on Nov. 10 that multiple Fed officials continued to counsel patience after the October decision. Finance.biggo.com reported on Nov. 10 that the Fed would receive at least one more jobs report and several inflation readings before the December meeting.
counsel patience
The main reading and its strongest sourced challenge stay visible together.
25 basis points
“Even if, as I expect, the monthly rate of inflation improves in October, I am leaning toward supporting an increase in our policy rate of 25 basis points at the FOMC’s December meeting,” Waller said.
counsel patience
Since the October decision, multiple Fed officials have continued to counsel patience while emphasizing the need to bring inflation back to the central bank's 2% target.
The narrower reading is that Waller was trying to keep market expectations from easing too early, rather than pre-committing the full committee. Times Now reported on Nov. 10 that although Waller favored a quarter-percentage-point increase, he left the door open to a larger adjustment if incoming inflation data proved significantly worse than anticipated.
The line he drew is public enough to test. A same-day account said Waller supported a December rate hike and said that if October core CPI rises 0.3% month-over-month or more, the December meeting should consider a 50-basis-point increase to avoid damaging the central bank’s credibility.
Bloomingbit reported on Nov. 10 that Waller would support a rate increase in December even if October consumer price index data improves from September. That is why a soft reading alone would not settle the pause case; the question is whether other officials return to the patience language that CNBC reported after the October decision.
For households with broad stock or bond funds, the immediate issue is relief from lower rates. Because Waller described failure to act as sending rates lower immediately, holdings that depend on that relief would lose it if officials follow his argument; cash-like holdings would remain tied to a higher policy path.
For institutions, the exposure sits in funding and positioning. If markets had priced in additional hikes because of Fed communications, as TradingView reported on Nov. 10, banks and leveraged funds expecting easier conditions would face an adjustment if officials follow Waller’s argument.
The public answer is the October CPI report and the remarks that follow it before the Federal Open Market Committee’s December meeting. A hot core reading would make Waller’s larger-move warning the live risk; a softer reading followed by renewed patience would put the pause back on the table.