Federal Reserve Governor Christopher Waller warned that a 50 basis point increase to interest rates in December may be necessary to protect the central bank’s credibility if price growth remains elevated. Waller stated that a consumer price index increase of 0.3% or more for October would signal that inflation is moving further from the target, potentially requiring a rate hike that is double the typical adjustment.
The hawkish signal was echoed by Governor Lisa Logan, who backed at least two more quarter-point hikes and suggested that policy may need to tighten more quickly than it did earlier this fall. The comments and latest U.S. economic data caused the U.S. dollar to strengthen against the British pound, while Waller added that anticipated productivity gains from artificial intelligence and stock market volatility do not impact his rate decisions.
