Fed Governor Waller says rate hike possible if inflation high

Federal Reserve Governor Christopher Waller delivered a speech in New York on Monday, July 13, 2026, signaling that the central bank may need to raise interest rates in the near term if inflation remains stubbornly high, directly challenging market expectations for cuts. He emphasized that policymakers are at a crossroads, with a rate hike being an equally plausible scenario as holding steady.

Waller pointed to persistent inflationary pressures driven by three main factors: tariffs implemented in 2025, rising energy costs linked to the escalating U.S.-Iran conflict, and demand spillovers from the artificial intelligence infrastructure boom. He noted that core inflation, which strips out volatile food and energy prices, has been elevated throughout the year. The core personal consumption expenditures index reached 3.4% in the year through May.

The governor stated that the upcoming Consumer Price Index report, due Tuesday, July 14, would be critical. He said if the core inflation reading comes in hotter than expected, the Federal Open Market Committee would need to consider tightening monetary policy. Waller stressed that after several months of rising core inflation, he would...