Federal Reserve Governor Christopher Waller said Thursday he is inclined to support keeping interest rates unchanged at the September 15–16 FOMC meeting, provided upcoming inflation data continue showing signs of cooling. Speaking at the Reuters NEXT Newsmaker Interview in Washington, D.C., Waller acknowledged inflation remains "meaningfully above" the Fed's 2% target but argued headline annual figures are painting a misleadingly grim picture of where price pressures actually stand.
Waller pointed to three-month core personal consumption expenditures inflation, which he said has fallen from 4.76% in February 2026 to 3.05% through July. He also said nonmarket services prices are artificially inflating headline readings, and a pending Bureau of Economic Analysis methodology revision could reduce 12-month PCE inflation by several tenths of a percentage point. His remarks contrasted with Chairman Kevin Warsh's Jackson Hole tone, and market-implied hike probability dropped to 48.4% from above 60% following Waller's comments.
If the cooling trend persists in data due over the next two weeks, Waller said he would support holding the federal funds rate at its current setting. The central bank has held its benchmark rate at 3.5%–3.75% through five consecutive FOMC meetings in 2026. Waller was explicit that his position is conditional: "If there is evidence that progress toward 2% inflation reversed in August, a small adjustment in our stance would help ensure that it resumes."
The August CPI and PPI reports, both due September 11, will effectively determine Waller's vote. What remains unknown is whether those reports will confirm continued disinflation or show a reversal, and how other FOMC participants will weigh the same data given the apparent divergence at the top of the Fed.