Fed's Waller Leans Toward December Rate Hike, Says Hot October CPI Could Justify Half-Point Move

Federal Reserve Governor Christopher Waller said in a speech in London on November 10, 2026, that he is leaning toward supporting a 25 basis point interest rate increase at the Fed's December meeting, even if October inflation data comes in better than expected. But he added a conditional twist: if the October Consumer Price Index report matches the pattern of the prior two months, with core inflation running around 0.3 percent or higher, he believes the Fed should consider a larger 50 basis point move instead, according to the text of his remarks published by the Federal Reserve Board.

What Waller Said

Waller's baseline position, as stated in his prepared remarks, is a quarter-point hike in December. But he said that if the October CPI data "are similar to the past two monthly readings—with core CPI inflation around 0.3 percent or even higher—then a stronger policy move may be needed." CNBC quoted him as saying, "In that case, I believe a 50 basis point hike in the policy rate should be considered at the December meeting." Waller added that "Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take."

In describing the backdrop, Waller characterized the economy as growing "at a healthy pace," with a labor market that "has also been solid" if not especially dynamic in the current low-hire, low-fire climate, according to CNBC's account of the speech. He called September's inflation data "bad," and cited Fed research suggesting that elevated energy prices could feed into core inflation more persistently than in the past, with those pressures potentially persisting "well into 2027" if oil prices remain elevated. He also noted that Fed communications before and at the October meeting had already led financial markets to price in some additional tightening.

The policy debate is not settled inside the Fed. CNBC reported that the October FOMC decision to hold rates steady was not unanimous, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting, and that Chicago Fed President Austan Goolsbee said on Monday the Fed must be careful not to let the economy run too hot "because once it gets overheated, it's extremely painful to get rid of that kind of overheating." Markets, meanwhile, were pricing in a better than 80% chance of a December quarter-point hike and no chance of a half-point move, according to CME Group's FedWatch tool as cited by CNBC.

Bottom line: Waller's remarks set a clear, data-dependent threshold: a quarter point in December is his base case, but a core CPI reading near 0.3 percent or above would, in his view, put a half-point hike on the table. That is an interpretation of his stated conditions, not a forecast of the Committee's decision, and market pricing cited by CNBC currently assigns no probability to a 50 basis point move.