Federal Reserve Governor Christopher Waller signaled Thursday that he is willing to give disinflation more time, but another rate hike at the September FOMC meeting remains possible if August inflation comes in stronger than expected.
In his remarks at a Reuters NEXT Newsmaker interview, Waller said recent inflation data has shown encouraging progress toward the Fed’s 2% target. If that continues, he would support leaving rates unchanged when policymakers meet Sept. 15-16.
The comments come as markets remain highly sensitive to inflation and Fed policy. Coinpaper recently reported that Bitcoin fell below $78,000 after July PCE inflation remained above the Fed’s target.
Waller Wants to Give Disinflation More Time
Waller’s position reflects growing confidence that shorter-term inflation pressures are easing even though annual inflation remains elevated.
Three-month core inflation fell to 3.05% through July from 4.76% in February, according to Waller, a trend he described as encouraging.
That improvement gives policymakers a reason to avoid tightening prematurely. However, Waller said monetary policy is currently only slightly restrictive, meaning the Fed still has room to act if inflation begins accelerating again.
The cautious stance follows a more hawkish debate inside the central bank. As Coinpaper previously covered, July FOMC minutes showed officials discussing further rate hikes if inflation stayed high.
September Fed Hike Still Depends on August Inflation
August inflation could quickly change Waller’s position.
“If there is continued progress toward our 2 percent goal, then I am willing to support holding the policy rate at its current level,” Waller said in his official Federal Reserve speech.
But he added that a hotter inflation reading could justify another small rate increase.
Markets reacted immediately. Reuters reported that traders reduced expectations for a September hike after Waller’s comments, while Treasury yields declined and the dollar weakened.
That reaction matters for crypto as well. Bitcoin has repeatedly responded to changes in Fed expectations this year, including a July rally after the Fed kept rates unchanged at 3.50%-3.75%.
Oil Prices Remain a Risk to Inflation
One major uncertainty is energy prices.
Waller acknowledged that oil and other energy costs remain an upside risk to inflation, even though their earlier spillover into broader consumer prices has been more limited than initially feared.
Rising energy prices could still increase transportation and production costs and complicate the Fed’s effort to return inflation to 2%.
For now, Waller appears willing to wait for clearer evidence before supporting another hike.
If August confirms that inflation is cooling, the Fed could remain on hold. But if price pressures accelerate again, another rate increase could quickly return to the center of the September debate.
