Fed Governor Waller: 'Willing to Hike Rates if Inflation Expectations Unsettle'

Christopher Waller, a governor of the U.S. Federal Reserve (Fed), stated that he would support further interest rate hikes if future inflation (inflation expectations) shows signs of spiraling out of control. Waller said that if he determines inflation expectations are becoming unstable and unanchored, he would not hesitate to raise the target range for the federal funds rate (FFR).

He diagnosed the current inflation trend as not moving in a desirable direction, noting that high energy prices due to protracted conflicts could have a more sustained impact on inflation than the labor market. Citing April producer price increases, Waller estimated that personal consumption expenditures (PCE) inflation rose about 3.8% year-on-year, which he analyzed as the highest in three years. He also assessed that core PCE inflation in April rose about 3.3% year-on-year, the highest in two and a half years.

Waller expressed concern that although long-term inflation expectations appear relatively low and well-anchored, some expectations for one to five years out have been rising since early 2026. He cited tariffs and surging oil prices, warning that a series of shocks that appear temporary, as seen during the pandemic, could lead to persistent inflation and unanchored inflation expectations.