Fed official: "Support for December rate hike, but...can't be sure" [Fed Watch]

An internal statement has emerged that the Federal Reserve (Fed) is leaning towards an additional rate hike.

Christopher Waller, a Fed official, said at a conference hosted by the American Institute for Economic Research (AIER) on the 2nd (local time) that "based on the current economic data and the expectation that inflation will fall to 2%, I am currently leaning towards supporting a rate hike at the December meeting."

However, he added, "Such a decision will depend on whether the data received before the policy meeting comes out higher than expected and changes my outlook on the inflation path." He continued, "If the data shows that 'inflation is cooling but still constrained economy,' I will support maintaining the rate."

Waller said, "The current policy stance is still sufficiently restrictive, so even if we decide on an additional rate hike at the next meeting, it would only mean a slight break in the pace." This means that the Fed's policy stance is not changing drastically. He further stated, "There is enough room to delay the pace of rate hikes if necessary to achieve the inflation target."

Regarding the labor market and inflation, he offered a mixed assessment. He said, "While it is pleasing that the labor market is holding up well under restrictive policy, the data on inflation over the past few months is not as pleasing," adding, "After much progress towards the 2% target over the past year and a half, recent data suggests that the progress on inflation may be stalling."

He continued, "There is a concern that inflation may be stuck above the 2% target, but this is not a certainty," while emphasizing, "I am receiving recent inflation data seriously, but I do not want to overreact as we saw similar inflation rises a year ago followed by a sustained decline."

He stressed, "I expect rate hikes to continue for the next year until the base rate reaches a more neutral level."