Federal Reserve Governor Christopher Waller has raised the stakes for Tuesday’s inflation report, saying he will back a December interest rate hike even if prices cool — and that a half-point move should be considered if core inflation comes in hot.
Key Points
- Waller December rate hike 50 basis points — the Fed governor said he would support at least a quarter-point hike at the 8–9 December meeting.
- If October core CPI rises 0.3% or more on the month, Waller said a 50-basis-point hike “should be considered”.
- Markets have fully priced in a quarter-point December hike, with the odds of a move rising after Waller’s remarks.
- October’s CPI, due at 8.30am Eastern on Tuesday, will carry no annual rate because October 2025 prices were never collected.
Waller made the remarks in a keynote speech on the US economic outlook at the Bank of England Watchers’ Conference in London on Tuesday. “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,” he said, referring to the October reading of the US consumer price index. He added that if core consumer prices rise 0.3% or more from September, “a 50 basis point hike in the policy rate should be considered at the December meeting.”
Waller, who is particularly concerned about the breadth of price increases across the economy, warned bluntly that a smaller move could damage the Fed’s standing. “If we only raise rates by 25 basis points, our credibility will be at risk, and I am not willing to take that risk,” he said. It would be the first move bigger than 25 basis points since 2022, and it would arrive with core PCE inflation still running at 3.1% a year and headline PCE at 3.7%.
A murky inflation read
Tuesday’s CPI report is unusually hard to read. Because the 2025 government shutdown left the Bureau of Labor Statistics unable to collect October 2025 prices, it will not publish 12-month percent changes for most indexes — its tables will show a dash with the footnote “Data unavailable due to the 2025 lapse in appropriations”. Traders will instead read the monthly core figure to two decimal places. A Reuters poll expects headline CPI to rise 0.3% on the month and core prices, which strip out food and energy, to rise 0.2%, after September’s hot report showed headline CPI up 0.6% on the month and 3.7% on the year.
Markets took Waller at his word. Nasdaq 100 futures fell sharply after the speech, spot gold’s intraday decline widened to as much as 1% to about $4,096 an ounce, silver moved lower in tandem, and the dollar strengthened. Bitcoin traded near $74,000. In rate markets, traders further increased bets on Fed tightening: the CME FedWatch tool showed about an 85% chance of a December hike late on Monday, rising to roughly 96% after Waller’s remarks, and the two-year Treasury yield rose to 4.58%.
What it means for the Fed
Tuesday’s report is the last full read on consumer prices the Federal Open Market Committee gets before it votes on 8–9 December. The Fed’s target range is 3.75% to 4.00% after it voted 10-2 last month to pause rate hikes, following a unanimous 25-basis-point hike in September. One governor does not set policy, and a December move would need broader support on the committee — but Waller has drawn a clear line at 0.3% core. Around 0.2% means a quarter point; 0.3% or above opens the door to 50.
For background on how the Fed sets borrowing costs, see our report on how the Federal Reserve affects interest rates, and on US inflation rising more than expected. More in our Business section.
Sources: Reuters via The Hindu BusinessLine, “US Fed’s Waller plans to support at least a quarter-point rate hike in December”; StockVolt, “Fed Hike Bets Build as Governor Waller Backs a December Increase Ahead of the October CPI Report”.