Fed Governor Waller Opens Door to Half-Point December Rate Hike

The debate over December interest rates comes as Federal Reserve officials voice concern about inflation. On November 9, Chicago Federal Reserve President Austan Goolsbee acknowledged that the US central bank was failing to contain it, according to Economia.

The following day, Federal Reserve Governor Christopher Waller signaled support for a December increase. His comments put both a quarter-point rise and a larger half-point move into discussion, according to CNBC International.

On November 10, Waller said he was leaning toward a December rate increase and could support a half-point move depending on inflation data, CNBC International reported.

His support for tightening was not limited to a disappointing inflation report. He would back a quarter-point increase even if October consumer price inflation cooled as expected, according to Business Line. The outlet reported that he was particularly concerned about how broadly prices were rising.

The larger option depends on the strength of the inflation reading. According to investingLive, Waller said a half-point increase might be needed if October core CPI inflation came in around 0.3% or higher.

That would be a significant step. The Financial Times described the potential half-point move as the largest rate increase since 2022, reporting that Waller wanted policymakers to weigh it if inflation failed to slow.

Waller has expressed his own position, not announced a Federal Reserve decision. His comments leave the size of a December increase conditional on inflation, as MarketWatch reported.

The distinction is between a smaller increase even with improving data and a larger one if inflation remains too strong. Bloomberg reported that Waller supports a December hike and would support a half-percentage-point increase if inflation continued to accelerate.

The October consumer price report is the immediate test. Watch whether core CPI inflation reaches the roughly 0.3% threshold cited by investingLive, and whether price increases remain broad, the concern highlighted by Business Line.

A cooler reading would not necessarily remove Waller's support for raising rates. According to Business Line, he would still back a quarter-point increase if inflation cooled as expected. The open question is how much tightening he and other policymakers ultimately support in December.