Waller's Inflation Report Warning Throws Rate Hike into Question

Federal Reserve Governor Christopher Waller cast doubt on a potential interest rate hike later this month during a speech on Thursday. The inflation report due September 11 will largely determine whether he supports an increase in rates or keeps them unchanged, according to Waller.

If the August inflation figures show cooling prices, Waller 'would be inclined' to keep the Fed's benchmark interest rate steady. However, if inflation comes in hot, he would consider a rate hike, citing that borrowing costs are only 'slightly restricting' consumer and business demand at present.

This outlook suggests that a rate hike later this month is not a done deal, contrary to previous expectations of nearly 65% as indicated by CME Fedwatch. Waller's comments also reflect the ongoing debate within the Fed about whether inflation has indeed cooled sufficiently or requires further action.