Federal Reserve Governor Christopher Waller said Thursday he is leaning toward holding interest rates steady at the central bank’s September meeting, assuming upcoming inflation data doesn’t deliver any shocks. His remarks, made in an interview with Reuters, stand in contrast to the more hawkish tone struck last week by Chairman Kevin Warsh.
Waller expressed confidence in the current inflation trajectory, arguing that tariff effects appear muted and that higher energy prices have not spilled over meaningfully into the broader economy. While he acknowledged inflation is “meaningfully above” the Fed’s 2% target, he said recent trends “suggest we are finally seeing some signs of disinflation.”
“If this continues in the data due over the next two weeks, I would be inclined to support holding the target for the federal funds rate at its current setting,” Waller said.
Slight restriction only
The governor described current policy as “only slightly restricting aggregate demand” and warned that an acceleration in inflation could push him toward tighter policy. “If there is evidence that progress toward 2% inflation reversed in August, a small adjustment in our stance would help ensure that it resumes,” he added.
His comments come less than a week after Warsh, speaking at the Fed’s annual Jackson Hole symposium, cast doubt on whether softer monthly inflation readings signal a meaningful improvement in underlying trends. “If trends don’t cooperate, we have work to do,” Warsh said. Markets interpreted those remarks as hawkish, quickly pricing in a stronger chance of a rate hike at the upcoming meeting.
Better than the headline numbers
Waller offered a more upbeat read of the data. Although July headline inflation came in at 3.7% and core at 3.3%, he argued the underlying trends are “better than the core numbers suggest” and that annual figures “are not the best guide for where inflation is today.”
He pointed to the Fed’s preferred gauge, noting the three-month annualized inflation rate has fallen from 4.76% in February to 3.05% currently. “That is a considerable improvement, and the speed of this downward trajectory is encouraging,” Waller said.
The Fed will receive its next major inflation reads — the consumer and producer price indexes — from the Bureau of Labor Statistics next week, ahead of the Sept. 15-16 policy meeting. Waller said he could change course if those reports or other indicators point to a reversal in progress.
Source: www.cnbc.com — https://www.cnbc.com/2026/09/03/fed-governor-waller-indicates-he-will-support-holding-rates-steady-at-september-meeting.html
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