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Federal Reserve Chairman Christopher J. Waller left open the possibility that the central bank will raise interest rates again in september, although he noted that the decision will depend primarily on the evolution of inflation.
Waller explained that the inflation data for August will be crucial for the Federal Open Market Committee (FOMC) meeting, scheduled for september 15 and 16. If prices continue to moderate, he will support keeping the benchmark rate unchanged.
However, he warned that a spike in inflation could lead him to support another rate hike. This means that, for now, the Fed does not have a predetermined decision and will evaluate the new indicators before defining its next move.
One of the main factors Waller is watching is inflation as measured by the Personal Consumption Expenditures (PCE) price index. Through july, this indicator registered a year-over-year increase of 3.7%, while the core PCE, which excludes food and energy, rose 3.3%.
Although inflation remains above the Fed’s 2% target, Waller noted that price pressures have shown signs of moderation. Three-month annualized core inflation was 3.05% through july, down from 4.76% in february.
The performance of the U.S. economy will also be relevant to the monetary policy decision. Real Gross Domestic Product (GDP) grew at an annualized rate of 1.8% during the first half of 2026, while final private domestic spending increased by 3%.
In the labor market, Waller pointed out that the United States generated an average of about 60,000 jobs per month through July and that the unemployment rate stood at 4.1%. These figures show an economy that continues to grow, albeit with a less dynamic labor market.
The official also identified risks that could put renewed pressure on prices, including rising energy costs, new tariffs, and potential pressures related to technology goods due to the strong growth in investment in artificial intelligence.
Despite these risks, Waller believes that wage growth, combined with productivity gains, remains compatible with an eventual reduction in inflation toward the 2% target.
For now, the central message is that the Fed will maintain a data-dependent stance. If inflation continues to slow, Waller will favor maintaining current rates; but if prices accelerate again, he could support another rate hike in september.
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