Fed Governor Waller: September Rate Call Hinges on August Inflation

Federal Reserve Governor Christopher Waller said the recent cooling in inflation is a positive sign, but stressed that policymakers' September interest-rate decision will hinge on the August inflation report. Speaking in an interview at a Reuters event, Waller said the latest data suggest U.S. inflation is moving closer to the Fed's 2% target. If that progress continues, he said he would be prepared to back holding rates steady at the Federal Open Market Committee meeting on September 15–16. Waller pointed to a marked decline in short-term price pressures. Three-month core inflation, excluding volatile items, eased to 3.05% in July from 4.76% in February, a shift he said gives officials more scope to watch incoming data. He left the door open to another increase. If August inflation comes in hotter than expected, Waller said it could be enough to justify a small additional rate hike. His remarks were seen as more moderate than recent internal debate reflected in the July meeting minutes, which showed some officials still weighing whether further tightening would be needed if inflation stayed elevated. Markets moved quickly after his comments. Reuters reported that traders pared back expectations for a September hike, U.S. Treasury yields fell, and the dollar weakened. Waller also flagged oil and broader energy costs as upside risks to inflation. Sustained gains in energy prices could lift transportation and production costs, complicating the Fed's effort to return inflation to 2%. For crypto markets, shifting rate expectations are likely to remain a key driver of risk assets such as Bitcoin, CoinDesk noted.