Waller leans toward a December rate hike, even if inflation improves
US Federal Reserve Governor expects to hike interest rates by 0.25% regardless of today's CPI reading, and more if it comes in hotter than expected.
Key takeaways
Federal Reserve Governor Christopher J. Waller said Tuesday he is leaning toward a rate increase in December even if inflation improves.
He tied a larger increase to October's core consumer price index reading, which tracks the monthly change in prices excluding food and energy and is published at 8:30 AM ET today. If that reading is around 0.3% or higher, Waller said a stronger move may be needed.
"In that case, I believe a 50 basis point hike in the policy rate should be considered at the December meeting," the Chairman said in a speech in London. "Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take."
A basis point is a hundredth of a percentage point. Fifty basis points is half a percentage point, and 25 is a quarter of a percentage point.
The Federal Open Market Committee left its target range for the federal funds rate at 3.75% to 4% on Oct. 28. The committee meets again Dec. 8-9.
Waller still expects the monthly inflation rate to improve, though he gave no figure for how much. Regardless, he said he is leaning toward a quarter-point increase next month as inflation is too high and well above the Fed's 2% goal.
The Dow Jones consensus forecast for consumer prices is a monthly rise of 0.3% in overall prices and 0.2% in core prices, CNBC reported. In September, overall prices rose 0.6% while core prices rose 0.3%.
Today's report from the Bureau of Labor Statistics will not include an annual inflation rate. Last year's government shutdown kept the bureau from collecting some prices, so there is no comparable index for October 2025, CNBC reported.
Futures mixed after Monday gains
Stock futures were mixed early Tuesday, ahead of the report. Dow futures were up 177 points, or 0.3%, S&P 500 futures were up 0.1%, and Nasdaq-100 futures were down 0.2%, CNBC reported.
This follows gains on Monday after last week's sell-off. CNBC said the S&P 500 rose 2.35% to 7,549.94, and the Nasdaq-100 rose 3.4% in trading yesterday. Accordingly, State Street's SPDR S&P 500 ETF Trust, SPY, rose 2.4% while the Invesco QQQ Trust, QQQ, which tracks the Nasdaq-100, rose 3.5%.
Last week's drop, then Monday's bounce, in SPY and QQQ
- SPY · 100.08
- QQQ · 99.74
The rebound carried overseas. In Tuesday's Asia session, South Korea's Kospi rose 4.4%, while Japan's Nikkei 225 climbed 2.9%. France's CAC 40 and Britain's FTSE 100 were also higher before the U.S. open.
Oil was lower after US President Donald Trump, speaking Monday, called new strikes in the war with Iran "quite unlikely."
Brent crude was at $90.54 a barrel, down 2.2%, early Tuesday. United States Commodity Funds' United States Oil Fund, USO, fell 3.9% on Monday.
Trump said: "We're seeing momentum toward the end of this conflict. I think it's going to be ending fairly soon," CNBC reported.
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