Fed's Waller open to holding rates steady if inflation cools

Federal Reserve Governor Christopher Waller said Thursday he would be inclined to keep interest rates steady at the central bank's upcoming meeting if upcoming inflation data shows continued progress, though he warned that a rate hike remains possible if price pressures accelerate. His remarks highlighted divisions among Fed officials as they prepare for a crucial policy vote in mid-September. Speaking at a Reuters event, Waller said his decision will be heavily influenced by August inflation data due in the coming weeks. "If there is continued progress toward our 2% goal, then I am willing to support holding the policy rate at its current level," he said. However, he added that if inflation comes in hot, he would consider a rate hike at the September 15-16 meeting. The current federal funds rate target is 3.50% to 3.75%. Waller noted that while inflation remains "meaningfully above" the Fed's 2% target, recent data suggest the economy is finally seeing some signs of disinflation. He expressed optimism that some recent drivers of price pressures, such as elevated energy costs and tariffs, may not remain significant sources of ongoing inflation.