US Federal Reserve Governor Christopher Waller has signaled that additional interest rate increases are likely in the coming months, as <a s 2 per cent target. However, he noted that the timing and frequency of these hikes will be contingent upon incoming economic data.
Speaking at the Istanbul Economic Forum in Türkiye on Thursday, Waller stated that the US economy possesses enough resilience to handle tighter monetary policy, even as persistent price pressures continue to complicate inflation control efforts.
“If the economic data continue to come in as <a Waller said.
He clarified, however, that the central bank is not obligated to raise rates at every single policy meeting.
“The hikes do not need to come at consecutive meetings, but they should be in place in an acceptable period of time,” he added.
His comments follow the Federal Open Market Committee’s (FOMC) September decision to raise the benchmark interest rate by 25 basis points to a range of 3.75-4 per cent, which concluded a nine-month period where rates remained unchanged.
Waller explained that the move to resume tightening was prompted by several months of economic data rather than a reaction to a single inflation report.
He cited a stable labor market and ongoing inflationary pressures, such as high energy costs, the expansion of artificial intelligence infrastructure, and uncertainties regarding global trade.
“Instead, it was a preponderance of evidence over several months that the risks for monetary policy had shifted, reflecting a strengthened labor market and a range of persistent inflationary forces,” he said.
Waller observed that the conflict in the Middle East has contributed to elevated energy prices, while damaged infrastructure and low inventory levels could keep oil prices high through 2027.
He also pointed to the inflationary effects of expanding artificial intelligence infrastructure, noting that evidence suggests the AI buildout is significantly driving up prices for high-tech consumer goods.
Ongoing trade disputes and the <a s target.
“Overall, the new data reinforce my view that the labor market is stable and inflation is too high. For at least the near term, policy will be focused on the inflation side of our mandate,” he said.
He also expressed confidence that more restrictive monetary policy would not cause significant harm to economic growth.
“I am not greatly concerned that tighter monetary policy threatens a damaging slowdown in the economy,” Waller said, pointing to signs that economic activity strengthened during the second half of 2026.
Regarding the outlook for further tightening, Waller highlighted the Fed’s September economic projections, which indicated that 16 of 18 policymakers expected at least one more interest rate hike during the final two meetings of 2026.
Four of those officials anticipated two additional increases.
He mentioned that financial markets are also accounting for further tightening, with futures pricing showing an 85 per cent probability of at least one rate hike by the December meeting, based on data from October 7.
Waller emphasized that the Fed’s economic projections serve to communicate the likely path of monetary policy without locking policymakers into a rigid course of action.
“Simply put, policymakers could signal where they are likely headed while acknowledging that there is no fixed final destination—except for the achievement of price stability and maximum employment,” he said.
His remarks suggest that while further US monetary tightening is probable, the pace of future increases will depend on whether inflation shows clear signs of moving back toward the Federal Reserve’s target.
