December Fed Rate Hike: Waller Leaves Door Open
Waller signaled support for a December Fed rate hike while leaving a larger move on the table, raising tightening odds and pressuring risk positioning.
KEY TAKEAWAYS
- Waller backed a 25-basis-point December hike and left a 50-basis-point option tied to October core CPI.
- He warned restricting action under hotter inflation would risk the Fed's credibility.
- Fed-funds futures at the Nov.9 close implied about an 85% probability of a December hike.
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Federal Reserve Governor Christopher J. Waller said in prepared remarks on Nov. 10, 2026, that he would support a December Fed rate hike while leaving open a larger move if October inflation proved materially hotter, reinforcing expectations of further Fed tightening.
Waller’s Conditional Policy Outlook and Economic Context
Speaking at the Bank of England Watchers Conference and the Money, Macro and Finance Society in London, Waller said he was leaning toward supporting a 25-basis-point increase at the December Federal Open Market Committee (FOMC) meeting, even if October inflation improved from September. He added that a 50-basis-point increase should be considered if October core consumer price index (CPI)—which excludes food and energy—rose about 0.3% month over month or higher. Waller warned that limiting the increase to 25 basis points under that inflation scenario would risk the Fed’s credibility.
He said he supported the FOMC majority’s decision at the most recent meeting to hold the policy rate, emphasizing that his remarks reflected one policymaker’s view rather than a committee decision. Waller framed policy implementation as central to effectiveness, arguing that precise timing mattered less than ensuring communicated increases were carried out within a reasonable period. He said rate hikes need not occur at every meeting, but failing to follow through could weaken market expectations and loosen financial conditions.
Waller described economic activity as strong and the labor market as stable, while inflation remained too high and above the Fed’s 2% medium-term goal. Markets had already priced a high probability of a December move: fed-funds futures at the Nov. 9 close implied about an 85% chance of a hike at the early-December meeting, targeting a 4.00%–4.25% range.
Waller tied the decision directly to the October inflation data, highlighting core CPI as the key monthly read. Economists surveyed ahead of the release expected core CPI to rise about 0.2% from September. His conditional framework raised the importance of the incoming core print by anchoring the baseline step to the data while reserving a larger option, increasing the odds that persistent monthly price pressure would prompt faster tightening and adding immediate pressure to risk assets.
