Waller backs further rate hikes as inflation stalls at 3 percent
Federal Reserve Governor Christopher Waller stated on October 8, 2026, that additional interest rate increases will be needed to return inflation to the 2 percent target, following the central bank's September rate increase to a range of 3.75 to 4.00 percent.
Energy, tariffs and tech investment
In remarks at the Istanbul Economic Forum, Waller explained why the Federal Open Market Committee raised the policy rate by 25 basis points in September to 3.75-4.00 percent after nine months on hold.
August data showed 12-month core PCE inflation at 3.0 percent, remaining stuck between 2.5 and 3.0 percent since spring 2024.
Waller cited three persistent factors driving inflation: high oil prices from Middle East conflicts, the artificial intelligence buildout lifting high-tech prices, and new tariff risks.
With employment solid, Waller noted: “For at least the near term, policy will be focused on the inflation side of our mandate.”
Signaling without promises
Waller framed the Summary of Economic Projections as an intermediate signaling mechanism that anchors market expectations without locking in fixed policy paths.
Projections from the September meeting revealed that 16 of 18 FOMC participants anticipate at least one additional 25 basis point hike across the two remaining meetings in 2026, with four participants projecting two hikes.
Futures markets price an 85 percent probability of a rate increase by December and an 80 percent chance of two hikes by March 2027.
Guidance by another name
Waller frames the dot plot as a flexible signaling tool, yet markets invariably treat it as guidance.
Relying on non-binding participant forecasts fuels unnecessary volatility whenever monthly inflation figures diverge.
This posture preserves institutional flexibility while providing minimal genuine clarity.