Waller Backs 50-Basis-Point December Hike as Fed Credibility Trumps Softer CPI
Updated
Updated · CNBC · Nov 10
Waller Backs 50-Basis-Point December Hike as Fed Credibility Trumps Softer CPI
3 articles · Updated · CNBC · Nov 10
Summary
Christopher Waller said he is leaning toward a December rate increase even if October inflation cools, and would consider a 50-basis-point move if the CPI comes in above forecasts.
Waller argued the Fed must deliver hikes markets already expect after its October messaging, warning that failing to follow through would pull rates lower and undesirably loosen monetary policy.
Markets currently price better than an 80% chance of a quarter-point December hike and no chance of a half-point move, leaving Waller notably more hawkish than prevailing expectations.
The Fed skipped a hike in October to gather more data before its Dec. 8-9 meeting, though that decision drew dissents from Governor Lisa Cook and Cleveland Fed President Beth Hammack.
Tuesday's CPI report is one of the last major inputs before that meeting, with Waller saying inflation still requires higher rates sooner rather than later despite healthy growth and a solid labor market.