Fed Governor Hints at Rate Hike Decision Delayed by Inflation Report

Federal Reserve Governor Christopher Waller said that an upcoming inflation report will determine whether he supports an interest rate hike later this month. The US government is set to release August inflation figures on September 11, and if they show continued cooling, Waller would be inclined to keep the Fed's benchmark interest rate unchanged.

However, if inflation comes in hot, Waller would consider a rate hike. He noted that borrowing costs are only slightly restricting consumer and business demand, but 'it may not take much acceleration in inflation to nudge me into supporting' a rate hike.

Waller's comments suggest that a rate hike later this month is not a done deal. Stock prices rose and bond yields fell in response to his remarks. Several members of the Fed's rate-setting committee have voiced concerns about price increases still being too high, suggesting a rate hike may be needed.

Fed Chair Kevin Warsh has also hinted at a possible rate increase, stating that inflation had not shown sufficient improvement. Meanwhile, Vice President JD Vance reiterated the Trump administration's view that the Fed should actually cut its benchmark rate, rather than raise it or keep it unchanged.