Waller's Inflation Report Comments Muddy Rate Hike Outlook

Christopher Waller, a Federal Reserve governor, has muddied the outlook for an interest rate hike later this month. He said that the government's inflation report on September 11 will largely determine his position. If inflation continues to cool, he 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, and it may not take much acceleration in inflation to nudge him into supporting a rate hike.

The comments from Waller 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 that price increases are still too high, suggesting that a rate hike may be needed.