Federal Reserve governor Christopher Waller stated on Thursday that the central bank's upcoming decision on interest rates will largely depend on the August inflation figures due next week. If the report, scheduled for release on September 11, shows continued cooling of inflation, Waller indicated he would support keeping the Federal Reserve's benchmark interest rate unchanged.
"But if inflation comes in hot, I would consider a rate hike," Waller said. He added that current borrowing costs are only "slightly restricting" consumer and business demand, and "it may not take much acceleration in inflation to nudge me into supporting" a rate hike.
Waller, an influential member of the Fed's seven-person governing board, joins other officials who have expressed concerns about elevated price increases, suggesting a potential need for further rate hikes. Conversely, some Fed members believe inflation is gradually decreasing and that higher borrowing costs may not be necessary.
Last week, Fed Chair Kevin Warsh commented that inflation has not shown sufficient improvement, signaling that the Fed might have "more work to do." This statement raised expectations among Wall Street investors, who subsequently increased their bets on a rate hike at the Fed's September meeting. Bond yields also saw an increase following Warsh's remarks, heightening the significance of the upcoming September meeting.