Federal Reserve Governor Christopher Waller said the Fed may need to consider a near-term rate hike if core inflation data due this week stays elevated. He said recent strength in core inflation is a concern and pointed to tariffs, higher energy prices, and demand tied to artificial intelligence investment as the main drivers. Waller expects headline inflation to start easing this week, but said core inflation will remain the key metric to watch. At the same time, he said holding rates steady would still be a reasonable option if core inflation continues to cool. Waller also reiterated that the Fed is trying to bring inflation back to its 2% target without tightening policy so much that it pushes the economy into recession. He added that the U.S. labor market remains solid and close to the Fed’s maximum employment goal, while consumer spending and business investment are still strong. He expects AI-related investment to keep growing.
Federal Reserve Governor Christopher Waller said the Fed would need to consider a near-term rate hike if core inflation data due this week comes in elevated again, according to BlockBeats on July 14.
Waller said the recent rise in core inflation is a concern. He identified tariffs, higher energy prices, and demand from artificial intelligence investment as the main factors pushing inflation higher.
He said headline inflation is expected to start slowing this week, but core inflation will remain the main indicator to watch. Waller also said keeping rates unchanged would still be a reasonable choice if core inflation continues to move lower.
Waller reiterated that the Fed is committed to bringing inflation back to its 2% target while avoiding excessive tightening that could lead to a recession. He added that the U.S. labor market remains strong and close to the Fed’s maximum employment goal, while consumer spending and business investment are holding up well. He also expects AI-related investment to continue growing.
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