Waller's Inflation Report Warning Sinks Rate Hike Odds to 50-50

Federal Reserve Governor Christopher Waller said an upcoming inflation report will largely determine whether he supports an interest rate hike later this month or not. The government is set to release August's 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', he would consider a rate hike. According to Waller, 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 increase.

This suggests that a rate hike later this month is not a done deal, despite several members of the Fed's rate-setting committee voicing concerns that price increases are still too high. The odds of a rate hike in September fell to roughly 50-50 after Waller's comments.