Federal Reserve Governor Christopher Waller signaled that the central bank may need to raise interest rates in the near term if upcoming inflation data continues to disappoint, warning that monetary policy stands at a crossroads.
Speaking in New York on July 13, Waller cited tariffs implemented in 2025, rising energy prices, and artificial-intelligence-driven demand as root causes keeping price pressures elevated. He said another hot core inflation reading this week would compel the Federal Open Market Committee to consider tightening. Markets have raised the probability of a July rate increase to 45 percent from 35 percent, with the FOMC scheduled to meet July 28-29.
The Fed has held its benchmark rate at 3.5 percent to 3.75 percent since June and has missed its 2 percent inflation target for five years. Economists expect the June consumer price index report to show headline inflation easing to 3.8 percent, though Waller said he needs several months of lower core readings before confidence returns.