US Federal Reserve Board Governor Waller signals additional rate increases and emphasizes SEP signaling role

In remarks at the Istanbul Economic Forum, Federal Reserve Board Governor Christopher J. Waller signaled that additional policy rate increases would be appropriate if economic data evolve as expected. He said near term policy will focus on inflation because the labor market remains stable while price pressures are too high and have made insufficient progress toward the Federal Open Market Committee’s 2 percent goal. The timing of further increases can remain flexible, and hikes need not occur at consecutive meetings. Waller attributed his support for the FOMC’s September increase of 25 basis points, which lifted the policy rate to 3.75 percent to 4 percent, to evidence accumulated over several months rather than a single inflation reading. Persistent inflation risks include elevated energy prices, rising high tech consumer prices associated with the artificial intelligence buildout and potential new tariffs. Revised August data showed monthly core personal consumption expenditures inflation of 0.25 percent and a 12 month rate of 3 percent, while September employment data indicated a solid and stable labor market. Waller characterized the Summary of Economic Projections as a signaling tool that indicates the likely direction and broad extent of policy without fixing the pace or size of rate moves. Sixteen of 18 FOMC participants projected at least one more increase during the two remaining 2026 meetings, including four who projected two. This approach gives markets information about the likely policy path while preserving the FOMC’s ability to respond to incoming data.