Waller Hints at Possible Rate Hike in September Amid August Inflation Concerns

Federal Reserve Governor Christopher Waller has hinted that he might support another interest rate increase at the September FOMC meeting if August inflation data exceeds expectations. During a Reuters NEXT Newsmaker interview, Waller stated that recent economic indicators have shown inflation moving in a positive direction toward the central bank's 2% target.

Waller noted that core inflation has slowed down, with the three-month core price inflation rate dropping to 3.05% through July, down from 4.76% in February. He described this moderating pace as encouraging and said it gives the Fed scope to increase rates should inflation pick up again.

However, Waller also emphasized that monetary policy remains only slightly restrictive and suggested that the Fed might pause tightening for the time being if future data indicates continued progress toward the 2% target. He pointed out that a short-term spike in price data would prompt a renewed debate among policymakers about further rate hikes.

The market reaction to Waller's remarks was immediate, with traders reducing the odds of a September rate hike and US Treasury yields declining. This shift in Fed interest rate expectations has consistently influenced the digital asset market this year, as seen in Bitcoin's price movements following previous FOMC meetings.