Federal Reserve’s Waller urges patience, says ‘give disinflation a chance’

Federal Reserve Governor Christopher Waller wants his colleagues to take a breath before reaching for the rate-hike lever again. Speaking on September 3, Waller signaled he’s inclined to keep the federal funds rate parked at its current 3.5% to 3.75% range at the upcoming FOMC meeting, arguing that recent inflation data deserves time to play out before policymakers react.

His core message was blunt: “Give disinflation a chance. We can wait one meeting.”

The numbers behind the patience

Waller’s case for holding steady rests on a genuinely encouraging data point. The three-month core inflation rate dropped from 4.76% in February to 3.05% through July. That’s still well above the Fed’s 2% target, but the trajectory is moving in the right direction.

He described the downward trend as “encouraging.” Waller also made a practical argument against hiking: a single 25-basis-point increase wouldn’t do much to meaningfully push CPI closer to target. Current monetary policy is, by his own analysis, only slightly restrictive, which means the existing rate level is doing some work on inflation already.

A crowded field of risks

Waller’s remarks didn’t happen in a vacuum. Tariffs implemented in 2025 continue to ripple through supply chains and consumer prices. Elevated energy costs tied to ongoing military conflicts in the Middle East are keeping input prices stubbornly high in key sectors. And then there’s the wildcard: AI-driven demand is creating new pricing dynamics that economists are still trying to fully understand.

That said, Waller wasn’t ruling anything out. He made clear that if upcoming inflation data proves disappointing, a reassessment of the current policy stance would be on the table. Persistently high core inflation, he has warned previously, could necessitate tighter policy.

Where Waller sits on the spectrum

Waller’s position represents a notable evolution in his own thinking. He entered 2026 with a relatively dovish outlook, expecting that inflation would cool more quickly than it did. When that didn’t materialize, he shifted toward a more data-dependent posture.

That puts him at an interesting distance from Chairman Kevin Warsh, who has reportedly leaned toward a more aggressive stance on rates. Waller’s argument is essentially temporal: one more month of data won’t cost the Fed its credibility, but acting prematurely on incomplete information might.

What markets are watching

For investors, Waller’s stance offers a short-term reprieve from rate-hike anxiety. Holding steady at 3.5% to 3.75% gives risk assets, including equities, room to breathe. If the next round of inflation data confirms the downward trend Waller is banking on, the case for an extended hold strengthens considerably. If the numbers bounce back toward February’s 4.76% level, the conversation shifts very quickly toward tightening.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.