Waller Would Still Back a December Hike Even If Inflation Cools

Federal Reserve Governor Christopher Waller said on Tuesday he would still support a December rate hike even if October inflation improves.

Waller delivered remarks on the economic outlook at the Bank of England Watchers Conference in London on Tuesday, November 10, 2026. He spoke hours before October's inflation data, due at 8:30 a.m. ET, and before U.S. markets opened.

Waller is one governor on the Federal Open Market Committee, the Fed's rate-setting panel. In a footnote, he stressed the views expressed are his own, not necessarily his colleagues'.

A quarter-point December hike is his base case

"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.

His recap used the softer wording of leaning toward supporting. The position was the same quarter-point increase.

"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."

A basis point is one-hundredth of a percentage point, so 25 basis points equal a quarter of a percentage point. The December meeting runs December 8-9.

A Reuters survey forecast headline CPI up 0.3% and core CPI up 0.2% for October, both from September. Those are forecasts made before the release, not results.

Core CPI strips out volatile food and energy prices. The same survey had core CPI rising 0.3% in September.

The current target range is 3.75% to 4.00%, after a September increase and an October hold. A quarter-point hike would lift it to 4.00% to 4.25%.

Futures priced about an 85% chance of a December hike at Monday's close, Reuters reported. They also gave a better-than-even chance of another hike as soon as March.

A hotter core print puts a half-point move in play

The condition is a repeat of the past two readings. If October core CPI inflation comes in around 0.3 percent or even higher, Waller said, a stronger policy move may be needed.

That is one test, stated two ways in the speech. No improvement over September means core inflation near 0.3 percent again, as in the past two readings.

"In that case, I believe a 50 basis point hike in the policy rate should be considered at the December meeting," he said.

A 50 basis point hike would lift the target range to 4.25% to 4.50%, a TickerGrove calculation. Waller framed it as a move to consider, not a decision or a promise.

"Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take," he said. That credibility warning belongs only to the hot-print case above.

His main text added a broader version of the same point. "However, if inflation comes in substantially higher than I expect, more robust action by the FOMC may be called for."

Why he backed October's pause

Waller explained his own October vote, not the committee's stated reason. He supported the majority in holding policy steady at that meeting.

His rationale was that committee communication had already led markets to price in some tightening. "what really matters is that those hikes are eventually carried out," 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," Waller said.

"So, while the precise timing of the hikes doesn't matter, ensuring that the promised hikes are implemented in a reasonable period of time does," he said.

Reuters noted that Waller's directness contrasts with Chair Kevin Warsh's resistance to giving any rate-path guidance. That contrast is Reuters' context, not something Waller said about Warsh.

Inflation is too high and broadening, he says

Inflation based on personal consumption expenditures, the measure the FOMC targets, rose 0.5 percent in September, Waller said. It rose 3.7 percent over the previous 12 months.

Core PCE inflation rose 0.3 percent in September and 3.1 percent from a year earlier, he said. Those are PCE figures for September, as Waller stated them, not CPI figures.

September's inflation data were bad, he added. "There was no silver lining."

More than 70 percent of the components of core PCE service prices saw 12-month increases above 3 percent in September. Waller said he is particularly concerned about the breadth of price increases.

Later today, Waller will watch whether that breadth continues. He named high-tech goods prices tied to the AI buildout, and whether energy prices pass through to goods and services.

Staff work points to pressure ahead

Waller described two Federal Reserve staff analyses in the speech. Neither is a forecast by Waller or by the FOMC.

One exercise built price-pressure indexes from ISM survey text, in a FEDS Note dated October 1. The October ISM data point to the possibility of more price increases ahead, he said.

A second analysis, a FEDS Note dated November 9, covers energy pass-through after the pandemic. If oil prices remain elevated, those pressures could persist well into 2027, he said.

Growth is strong, and the labor market is stable but not clearly healthy

The initial estimate put third-quarter GDP growth at 3.4 percent, Waller said. He expects growth backing off a bit this quarter, with output still growing at a solid pace.

October payrolls rose by 165,000 jobs, with 85,000 jobs added to the prior two months' estimates. Six- and 12-month averages are closer to 80,000 jobs a month.

The unemployment rate ticked down to 4.1 percent in October. Waller called the market solid, with supply and demand in rough balance.

For over a year, he said, it has been "low hire, low fire." He asked whether a stable labor market necessarily means a healthy one, and worried it has lost dynamism.

Near term, he sees the labor market as stable. Employment sits close to the FOMC's maximum-employment goal, he said.

What remains unknown

What remains unknown starts with October's CPI itself. It had not been released when Waller spoke, and it is due at 8:30 a.m. ET today.

The release will carry no year-over-year CPI rates. The Bureau of Labor Statistics has no October 2025 comparison base, after last year's shutdown stopped data collection.

No FOMC decision for December exists. One governor's stated support does not settle how the committee will vote on December 8-9.

No settled market reaction exists yet either. Waller spoke before the U.S. open, so markets have not judged the speech and the data together.

The 8:30 release decides the size of the debate

What to watch: October CPI at 8:30 a.m. ET today. A core rise around 0.3 percent or more meets the test Waller set for considering a half-point hike.

A core rise near the forecast 0.2 percent leaves his quarter-point base case standing. The December 8-9 meeting is where either case becomes a decision.