Federal Reserve governor Christopher Waller said Tuesday that the central bank may need to raise interest rates by half a percentage point in December, double the usual increase, if inflation kept running hot.
A government report released hours later suggested inflation continued to be a problem in October.
Speaking in London before the report came out, Waller said he was leaning toward a quarter-point increase at the Fed’s December meeting. But he set a marker: If core prices (those excluding volatile food and energy prices) rose 0.3 percent or more in October, as they had in the previous two months, a bigger hike should be on the table.
In that case, Waller said, “hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take.”
Core prices rose 0.3 percent, the Bureau of Labor Statistics reported Tuesday. Overall consumer prices rose 0.4 percent from September, more than economists expected. These numbers showed that although the pace of inflation had eased slightly, it remained elevated.
Waller’s comments are the latest sign that the Fed is preparing to raise rates again, a move meant to cool the economy by making it more expensive to borrow, including for mortgages, car loans and business loans.
President Donald Trump has repeatedly demanded lower interest rates. Waller, whom Trump appointed to the Fed board during his first term, pushed for cuts last year, dissenting in favor of one as recently as in January.
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