Fed's Waller Backs Further Rate Hikes While Retaining Flexibility on Timing

Federal Reserve Governor Christopher Waller reiterated that additional interest rate hikes will likely be required to lower inflation to the 2% target, emphasizing that any potential pause does not signal a pivot toward monetary easing. Speaking at the Istanbul Economic Forum, Waller explained that rate increases do not have to occur at consecutive meetings, allowing flexibility for the October 27-28 FOMC meeting. He cited persistent inflation risks from energy shocks, tariffs, and AI infrastructure buildouts despite weak September job growth. Markets showed a muted reaction, pricing a 20% chance of an October hike and projecting three hikes by late 2027.