Fed's Waller open to leaving rates unchanged this month if inflation cools

Federal Reserve Governor Christopher Waller has indicated that he is open to maintaining interest rates unchanged during the upcoming U.S. central bank meeting if inflation shows signs of cooling off. Waller's decision will be influenced heavily by the data on August inflation. He stated that if inflation continues to improve towards the Fed's 2% goal, he would support keeping the policy rate at its current level.

However, Waller also warned that a path to higher interest rates is also possible if inflation remains high. He emphasized that the current 3.50%-3.75% Fed policy rate is only slightly restraining aggregate demand, and it may take only a small increase in inflation to prompt a tighter policy stance. Currently, inflation is above the 2% target but showing slow but steady progress towards the goal.

Waller noted that some factors driving inflation, such as elevated energy prices and tariffs, are likely to lose their impact soon. Nonetheless, he highlighted some upside risks to inflation, including higher energy prices and potential tariff increases affecting technology goods.