Fed Governor Waller Signals Support for Rate Hold in September, Easing Hike Fears
Federal Reserve Governor Christopher Waller delivered a crucial counter-signal to the hawkish rate-hike chatter that dominated the Jackson Hole Economic Symposium. Speaking at a Reuters NEXT Newsmaker event on September 3, 2026, Waller expressed a preference to keep interest rates steady at the upcoming September 15–16 FOMC meeting, provided that forthcoming inflation data confirms price pressures are cooling.
This remarks significantly eased immediate rate-hike fears. Prediction markets and interest rate futures rapidly repriced the September decision1, with the CME FedWatch Tool and Orrery/Polymarket pricing a "no change" outcome at approximately 80%, while the probability of a 25-basis-point rate hike dropped to 12–15% (down from nearly 70% earlier in the week). However, Waller maintained a data-dependent stance, warning that any upside surprises in inflation could still trigger a rate hike.
Verbatim Quotes
"But Fed Governor Christopher Waller said at a Reuters NEXT Newsmaker event on Thursday that he was inclined to argue in favor of keeping rates steady this month if upcoming data confirmed inflation pressures were cooling off." — Reuters
"As of today, the labor market is stable, with employment near its maximum sustainable level, and inflation is making slow but continued progress on reaching 2 percent. We will get another employment report and inflation reading before the next FOMC meeting. I don't expect that the employment data will deviate much from what we have been seeing. But if inflation comes in hot, I would consider a rate hike." — Federal Reserve Board of Governors
What It Means
Waller’s speech represents a tactical pause in the Federal Reserve's hawkish momentum led by Chairman Kevin Warsh. By emphasizing patience, Waller has shifted the market's focus entirely onto the upcoming August Consumer Price Index (CPI) and Producer Price Index (PPI) releases. If inflation data continues to show disinflation, the Fed will likely hold rates steady in September, despite the hawkish rhetoric from other policymakers. This pause offers temporary relief to financial markets, though the threat of further tightening remains a live option if inflation proves sticky.
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An instance of Central bank verbal signals deflate borrowing costs long before formal policy shifts. — It notes how Governor Waller's speech led to an immediate repricing of rate-hike expectations in financial and prediction markets. ↩︎