Fed's Waller Sees Additional Policy Tightening Ahead, Remains Flexible on Timing

02:28 PM EDT, 10/08/2026 (MT Newswires) -- The US central bank will likely have to raise interest rates further to bring inflation back to the 2% target faster, assuming there are no surprises in upcoming economic data, Federal Reserve Governor Christopher Waller said Thursday. However, he said the timing of any additional policy tightening is flexible. Most Fed officials expected another rate hike by year-end to curb inflation, though they vowed to base their future policy decisions on fresh data, according to minutes from the central bank's September meeting released Wednesday. In a unanimous decision last month, the Federal Open Market Committee lifted its policy rate by 25 basis points, marking the first hike in just over three years as it sought to bring inflation down to its 2% target. "If the economic data continue to come in as expected, I anticipate additional hikes to support a timelier return of inflation to our 2% goal," Waller said in prepared remarks for delivery at an economic forum in Istanbul. "But there is some flexibility about when those hikes will occur." Markets are currently pricing in an 83% probability that the central bank will keep its benchmark rate steady later this month, with the remaining odds in favor of a 25-basis-point hike, according to the CME FedWatch tool. "The hikes do not need to come at consecutive meetings, but they should be in place in an acceptable period of time," Waller said. US consumers' year-ahead inflation outlook reached the highest in more than three years in September, while labor market expectations "mostly improved," a New York Fed survey showed Wednesday. Late last month, New York Fed President John Williams said he expected monetary policy to get tighter, though he saw no urgency to act. Williams also serves as vice chair and a permanent voting member of the FOMC. Waller said he is "not greatly concerned" that a tighter monetary policy would threaten an economic slowdown because of the US economy is strengthening. S&P Global's (SPGI) said late last month that private-sector output growth accelerated to a 62-month high in September amid strength in both services and manufacturing. Waller said the US economy is currently in "roughly the same place" as it was at the time of the FOMC's September meeting, characterized by a solid labor market and elevated inflation. "For at least the near term, policy will be focused on the inflation side of our mandate," he said. Price: 401.26, Change: +6.07, Percent Change: +1.54