Fed’s Waller backs hold if August inflation cools, may consider September hike

Federal Reserve Governor Christopher Waller said he would support keeping policy rates unchanged if August inflation data extends the recent cooling trend, while also considering backing a September rate hike if the data comes in strong. Waller added that even without a sharp acceleration in inflation, the outlook could still support a more restrictive policy stance. He said a "small adjustment" to the policy rate could help restore progress if the cooling trend in August price data reverses. Waller also said there is considerable uncertainty over how inflation and the economic outlook could be affected by military conflict, trade policy and artificial intelligence, or AI. He added that GDP growth remains solid and rising stock prices could support stronger consumer spending. He said firm energy prices and tariffs are not clear drivers of persistent inflation pressure, and added that labor market conditions remain healthy, with the August employment report expected to continue that trend. Waller also said inflation still carries some upside risk, while wage growth is in line with expectations and returning toward 2%.