Fed's Waller Backs Quarter-Point Rate Hike
Federal Reserve Governor Christopher Waller plans to support at least a quarter-point rate hike in December, citing high inflation, with a possible half-point hike if core consumer prices rise 0.3% or more
Story timeline3 updates
Core inflation rose 0.3% from the previous month, meeting Waller's threshold for a larger rate increase.
October US inflation rose 0.4% month over month, above forecasts.
Story published. Federal Reserve Governor Christopher Waller plans to support at least a quarter-point rate hike in December, citing high inflation, with a possible half-point hike if core consumer prices rise 0.3% or more
Federal Reserve Governor Christopher Waller plans to support at least a quarter-point rate hike in December, citing the need to combat high inflation. Waller's comments come ahead of the Fed's December meeting, scheduled for December 8-9, where a rate hike is widely expected.
Waller suggests a half-point rate hike should be considered if core consumer prices rise 0.3% or more from September. This is a more aggressive stance than a quarter-point hike, indicating the Fed's concern over inflation. According to economists polled by Reuters, core CPI is likely to increase a moderate 0.2% last month from September.
The Federal Reserve's policy rate target range is expected to be 4.00%-4.25% after the December meeting. Financial markets price in about an 85% chance of a rate hike at the Fed's December meeting, reflecting the expectation of further policy tightening. Waller backed the central bank's decision last month to skip a rate hike, but now believes a rate hike is necessary to combat high inflation.
## Why it matters The Fed's decision on interest rates has significant implications for the economy. High inflation has been a concern for the central bank, and a rate hike is seen as a way to combat it. The Fed's policy rate target range is expected to increase, which could impact borrowing costs and economic growth. With financial markets already pricing in a high chance of a rate hike, the Fed's decision will be closely watched by investors and economists.
The stakes are high, and the Fed's decision will have far-reaching consequences. If the Fed fails to combat high inflation, it could hurt the central bank's credibility and lead to further economic instability. On the other hand, a rate hike could help bring inflation under control, but it could also slow down economic growth. As the Fed prepares to make its decision, all eyes will be on the December meeting to see how the central bank will navigate this delicate balance.
## What happens next The Fed's December meeting will be closely watched by investors and economists. With a rate hike widely expected, the focus will be on the size of the hike and the Fed's future policy direction. If the Fed decides to raise rates, it could have significant implications for the economy and financial markets. As the central bank navigates the challenges of high inflation and economic growth, its decisions will be closely scrutinized in the coming months.
