More rate hikes are coming, says Fed’s Waller
- a Middle East conflict projected to keep oil prices elevated through at least 2027
- an artificial intelligence (AI) buildout inflating high-tech consumer prices, and
- renewed tariff threats from continued trade disputes
Core personal consumption expenditures (PCE) inflation stood at 3% year-over-year and 0.25% monthly as of August, well above the Fed’s 2% target.
On recession risk, Waller was unequivocal. “With evidence that economic activity is strengthening in the second half of this year, I am not greatly concerned that tighter monetary policy threatens a damaging slowdown in the economy,” he said.
“But I am concerned that the recent acceleration in inflation — after what soon will be five and a half years of it above the FOMC’s target — will lead consumers, investors, and price-setting businesses to revise up their expectations for future inflation.”
Where are mortgage rates headed next? Selma Hepp, chief economist at Cotality, says the base case still points to lower mortgage rates over time, but inflation, bond yields, and geopolitical uncertainty continue to create significant volatility. https://t.co/FHN37YJIKP
— Mortgage Professional America Magazine (@MPAMagazineUS) October 8, 2026
Signaling, not forward guidance
Waller defended the Fed’s practice of signal-based communication as a middle ground between silence and binding commitments.
“Policymakers could signal where they are likely headed while acknowledging that there is no fixed final destination — except for the achievement of price stability and maximum employment,” he said.
