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# Fed's Waller leans toward a December rate hike and says 50 basis points should be considered if inflation runs hot
- URL: https://www.theglobalbanker.com/feds-waller-leans-toward-a-december-rate-hike-and-says-50-basis-points-should-be-considered-if-inflation-runs-hot/
- Published: 2026-11-10T13:07:08.000Z
- Updated: 2026-11-10T13:23:10.000Z
- Description: Federal Reserve Governor Christopher Waller says he leans toward a 25 basis point rise in December even if October inflation improves, and that a 50 basis point hike should be considered if core CPI inflation runs around 0.3% or higher.
- Author: TGB Editorial Team
- Tags: Central Banks, Americas, #newsroom

Federal Reserve Governor Christopher Waller said he is leaning toward supporting a 25 basis point increase in the policy rate at the Federal Open Market Committee's December meeting, even if the monthly rate of inflation improves in October as he expects. Speaking in London at the Bank of England Watchers Conference, he said a 50 basis point hike should be considered if the October consumer price data showed core CPI inflation around 0.3% or higher.

"Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take," Waller said in the speech. He said further tightening will be needed, sooner rather than later, to return inflation to a path that reaches 2% in the medium term.

## A DIVIDED COMMITTEE

The decision to hold at last month's meeting was not unanimous. Governor Lisa Cook and Cleveland Fed President Beth Hammack voted against it, arguing instead for a quarter-point increase in the federal funds rate. In September the FOMC had voted 12-0 to raise rates by 25 basis points, and most participants expected to raise at least once more before the end of the year, according to the committee's quarterly summary of economic projections.

Waller spoke a few hours before the release of the October consumer price index, and said that while he was hoping for an improvement over September, even if this occurs he would still support a 25 basis point increase in the policy rate at the December meeting.

## WHY HE BACKED THE HOLD

Waller said he had supported the FOMC majority in holding policy at its current setting at the most recent meeting, because the committee's communication about likely tightening had already led financial markets to price some of it in. Hikes did not need to come at consecutive meetings, he 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. In his view the precise timing of the hikes did not matter, but ensuring the promised hikes are implemented in a reasonable period of time did.

## SEPTEMBER'S INFLATION WAS BAD, HE SAYS

Waller called September's inflation data bad. Inflation based on personal consumption expenditures, the measure the FOMC targets, rose at a monthly rate of 0.5% in September and 3.7% over 12 months, while core PCE rose 0.3% on the month and 3.1% from a year earlier. More than 70% of the components of core PCE service prices saw 12-month increases above 3%, he said.

Research he cited suggests energy price pressures may pass through to goods and services in a more sustained way than in the past, and that, especially if oil prices remain elevated, these pressures could be larger than previously thought and persist well into 2027\. Tanker traffic through the Strait of Hormuz is moving at great expense, he said, with insurance and ship-to-ship transfers reportedly boosting oil prices by [US](https://www.theglobalbanker.com/market-united-states/)$20 to US$30 a barrel.

Real gross domestic product rose 3.4% in the third quarter on the initial estimate and the unemployment rate ticked down to 4.1% in October, Waller said, summing up economic activity as strong and the labour market as stable.

Short-dated Treasury yields rose after the speech, according to market reports: the two-year yield climbed about 6 basis points to 4.61% in London trading, and the 10-year yield was near 4.88%.

## THE TGB VIEW

Waller has raised the possibility of a half-point move if core inflation runs hot, while markets were pricing a better than 80% chance of a quarter-point December hike and no chance of a half point, according to the CME Group's FedWatch. US banking assets are concentrated: the TGB market profile counts 4,238 FDIC-insured institutions with combined assets of US$26.5tn at end-June 2026, and the 18 with assets above US$250bn held US$16.9tn, or 64% of industry assets. The next test is the next policy meeting, on 8-9 December.

*Related: [Federal Reserve holds rates at 3.75% to 4% as two policymakers vote for a hike](https://www.theglobalbanker.com/federal-reserve-holds-rates-at-3-75-to-4-as-two-policymakers-vote-for-a-hike/)*