Federal Reserve Governor Christopher J. Waller urged further interest rate increases in prepared remarks for a London conference Tuesday, arguing that inflation remains too high despite subdued hiring and low job separations.
The personal consumption expenditures price index, the Fed’s preferred inflation measure, rose 3.6% in the 12 months through September, the Bureau of Economic Analysis (BEA) said. Excluding food and energy, the index increased 3.1%. Both readings exceeded the Fed’s 2% inflation target.
Waller defended the Fed’s Oct. 28 decision to leave its target rate at 3.75% to 4%. The Federal Open Market Committee voted 10-2 to hold the rate; the two dissenters favored a quarter-point increase. Waller said the Fed could leave time between increases while maintaining its intention to tighten policy. In his assessment, backing away from that intention could pull market rates lower and make financial conditions less restrictive.
The labor market presents a separate consideration for policymakers. U.S. employers added 165,000 jobs in October, while the unemployment rate was 4.1%, the Bureau of Labor Statistics (BLS) said. Payroll gains averaged 48,000 a month over the preceding 12 months, according to the agency. Separately, the BEA estimated that U.S. economic output grew at a 3.4% annual rate in the third quarter.
Waller described employment conditions as “low hire, low fire.” The BLS recorded 5.4 million hires in September, a rate of 3.4%, and 5.3 million separations, a rate of 3.3%. Those figures measure workers entering jobs and leaving them, respectively.
The Fed’s next scheduled policy meeting is Dec. 8-9, 2026.
