New Delhi [India], October 9 (ANI): US Federal Reserve Governor Christopher Waller has indicated that further interest rate hikes are likely in the coming months as inflation remains stubbornly above the central bank's 2 per cent target, although the timing and pace of increases will depend on incoming economic data.
Speaking at the Istanbul Economic Forum in Türkiye on Thursday, Waller said the US economy remains resilient enough to withstand tighter monetary policy, while persistent price pressures continue to pose risks to inflation control.
"If the economic data continue to come in as expected, I anticipate additional hikes to support a timelier return of inflation to our 2 percent goal," Waller said.
However, he clarified that the central bank does not necessarily need to raise rates at every policy meeting.
"The hikes do not need to come at consecutive meetings, but they should be in place in an acceptable period of time," he added.
His remarks come after the Federal Open Market Committee (FOMC) raised its benchmark interest rate by 25 basis points in September to a range of 3.75-4 per cent, ending a nine-month period of unchanged rates.
Waller said the decision to resume tightening was driven by several months of economic evidence rather than a single inflation reading.
He pointed to a stable labour market and persistent inflationary pressures, including elevated energy prices, the expansion of artificial intelligence infrastructure and uncertainty surrounding global trade.
"Instead, it was a preponderance of evidence over several months that the risks for monetary policy had shifted, reflecting a strengthened labor market and a range of persistent inflationary forces," he said.
Waller noted that the ongoing Middle East conflict had contributed to high energy prices, while damaged infrastructure and low inventories could keep oil prices elevated through 2027.
He also highlighted the inflationary impact of expanding artificial intelligence infrastructure, saying evidence had mounted that the AI buildout was significantly driving up high-tech consumer prices.
Continuing trade conflicts and the possibility of additional tariffs could also put renewed upward pressure on inflation, he indicated.
On the latest economic data, Waller said US core personal consumption expenditures inflation stood at 3 per cent annually in August, remaining above the Fed's target.
"Overall, the new data reinforce my view that the labor market is stable and inflation is too high. For at least the near term, policy will be focused on the inflation side of our mandate," he said.
He also expressed confidence that tighter monetary policy would not significantly damage economic growth.
"I am not greatly concerned that tighter monetary policy threatens a damaging slowdown in the economy," Waller said, citing signs of strengthening economic activity in the second half of 2026.
On the outlook for further tightening, Waller highlighted the Fed's September economic projections, which showed that 16 of 18 policymakers expected at least one additional interest rate hike during the remaining two meetings of 2026. Four of them anticipated two more increases.
He said financial markets were also pricing in further tightening, with futures indicating an 85 per cent probability of at least one rate hike by the December meeting, based on prices as of October 7.
Waller emphasised that the Fed's economic projections help communicate the likely direction of monetary policy without committing policymakers to a fixed path.
"Simply put, policymakers could signal where they are likely headed while acknowledging that there is no fixed final destination—except for the achievement of price stability and maximum employment," he said.
His remarks suggest that while further US monetary tightening remains likely, the pace of future increases will depend on whether inflation shows meaningful signs of returning towards the Federal Reserve's target. (ANI)
US Fed's Waller expects more rate hikes as inflation stays elevated
