During a speech in London, Waller emphasized the importance of following through on interest rate hike expectations to avoid undermining the Federal Reserve's credibility. He expressed a preference for a rate increase in December, even if upcoming inflation data is softer than anticipated, and suggested that a 50 basis point hike should be considered if inflation readings exceed forecasts.
Waller warned that failing to implement promised hikes could lead to a reduction in market expectations for future increases, which would inadvertently loosen monetary policy. He noted that the economy is growing at a healthy pace, and while the timing of rate hikes is flexible, it is crucial that they occur within a reasonable timeframe.
The Federal Open Market Committee's recent decision to hold rates steady was not unanimous, with some members dissenting. As the October consumer price index report is set to be released, markets are currently pricing in an over 80% chance of a quarter-point hike in December, but no expectation for a half-point increase