Waller Backs December Rate Increase, Sets Higher-Hike Threshold

Federal Reserve Governor Christopher Waller said he would support a quarter-point interest-rate increase at the Federal Open Market Committee’s December meeting even if October inflation eased, and that officials should consider a half-point increase if core inflation remains elevated. His remarks in London on November 10 expressed his own view, not a decision by the committee.

Waller said a monthly core Consumer Price Index increase of about 0.3% or more, matching the previous two readings, would warrant considering a larger move. He said a quarter-point increase under that condition could put the Fed’s credibility at risk. The October CPI report was due later on November 10, so its result was not available when he spoke.

The FOMC is scheduled to meet December 8-9. The committee held its federal funds target range at 3.75%-4.00% on October 28; two members dissented in favor of a quarter-point increase. Waller’s comments do not establish what the committee will decide in December.

Waller said the October hold was possible because the Fed’s earlier communications had already led markets to anticipate tighter policy. He argued that officials should carry out increases they have...