Fed’s Waller Turns Hawkish Again, Fueling Talk of Break With Trump

Christopher Waller, a Federal Reserve governor once viewed as a dove, has recently started making the case for higher interest rates. The shift has revived the view that Waller, who had been regarded as a hawk until 2024, is reverting to his original stance. Some also interpret the turn as a sign he has distanced himself from the Trump administration after losing out in the competition to become Fed chair.

Speaking at an event in New York on July 13, Waller said the Federal Open Market Committee should consider tightening monetary policy in the near term if core inflation data due this week comes in high again. The U.S. Labor Department is scheduled to release June consumer price index data, including core CPI, on July 14.

Waller said the U.S. economy remains on solid footing, with the labor market stable and consumer demand holding up well. But monetary policy is at a crossroads, he said, because of inflation pressure from tariffs, higher energy prices and expanded artificial-intelligence infrastructure investment.

"However you measure it, inflation is rising this year," he said, citing the Fed’s preferred price gauge, the core personal consumption expenditures price index, which rose 3.4% in the 12 months through May.

Waller had previously been classified as a hawk. After joining the Fed’s Board of Governors in 2020, he made taming inflation his top priority and was grouped with former St. Louis Fed President James Bullard as one of the central bank’s leading hawks.

In 2023 and 2024, Waller said rate cuts were possible if economic data supported such a move. Even then, he repeatedly stressed that clear evidence was needed to show inflation was moving back toward target. Markets still saw him as a data-dependent hawk.

That changed sharply in 2025. He publicly argued for earlier rate cuts, citing a cooling labor market and downside risks to growth. He also said tariff-driven price increases were likely to be temporary, and at Federal Open Market Committee meetings he was among a minority supporting rate cuts. That led markets to start classifying him as one of the Fed’s leading doves.

But in 2026, he shifted again. With inflation proving more persistent than expected, Waller has concluded that price pressure could continue because of services inflation, AI investment and tariffs. He has since kept the door open to additional tightening.

Some also see a political dimension. Waller was widely mentioned last year as a leading contender to succeed former Chair Jerome Powell at the Fed. President Donald Trump ultimately nominated Kevin Warsh as the next Fed chair. Since then, Waller has moved away from his earlier calls for rate cuts and returned to stressing a hard line on inflation.

Park Shin-young, New York correspondent, Hankyung.com nyusos@hankyung.com