Waller Puts Half-Point December Fed Hike in Play
Markets put the odds of a December increase at 100% after core inflation held at 0.3% in October.
Federal Reserve Governor Christopher Waller said he would support raising the policy rate by one-quarter point at the central bank’s December 8–9 meeting. He also said officials may need to weigh a half-point increase if underlying consumer inflation reaches at least 0.3% for the month.
October data met that threshold, with core prices rising 0.3% for a third straight month. Futures markets then assigned a 100% chance to a December hike: an 89% likelihood of a quarter-point move and an 11% chance of a half-point increase. The Fed’s target range is currently 3.75% to 4% after a September increase, its first since 2023.
Waller pointed to persistent service-price growth, higher energy costs and strong construction linked to artificial intelligence as inflation pressures. September’s overall PCE inflation was 3.7% from a year earlier, while core PCE was 3.1%, above the Fed’s 2% goal. Bank of America expects three increases totaling 75 basis points before year-end, while other officials have also supported additional hikes.
Why it matters: Further Fed increases would keep mortgage borrowing costs tied to a period of tighter monetary policy.
- Mortgage Professional America