Fed Governor Waller sees December hike likely, opens door to possible half-point increase

Fed Governor Christopher Waller said Tuesday he "is leaning toward" a rate increase at the December meeting and could back a half-point hike, depending on incoming inflation data.

The Fed governor argued the central bank must deliver the additional hikes markets already expect or risk damaging its credibility. That framing matters: Waller is tying the December decision to the Fed's reputation for following through, not just to a single data point.

The half-point option is the headline for rate-sensitive positioning. A 50-basis-point move would be double the standard quarter-point increment, and Waller explicitly conditioned his openness on inflation readings. Interpretation: his support for a larger move is not a commitment. A cooler inflation print would likely keep him in the quarter-point camp, while a hot one hands the hawks a case for 50.

Waller's comments also narrow the debate. By saying he is leaning toward a December increase, he has effectively removed a pause from his own baseline, leaving size as the open question. Interpretation: traders pricing the meeting should focus less on whether the Fed hikes and more on how much, with Waller's data-dependent language making each inflation release a swing factor for the outcome.