Waller signals Fed pause hinges on August inflation data

Waller emphasized that while employment remains near sustainable levels, the upcoming data releases serve as the primary catalyst for the Federal Open Market Committee's next move. The U.S. Bureau of Labor Statistics is scheduled to publish the Producer Price Index on September 10 and the Consumer Price Index on September 11, just days before the committee convenes on September 15–16. Should inflation accelerate, Waller signaled a readiness to support a rate increase, citing his belief that current policy settings offer only limited restriction on demand.

This stance contrasts with the more hawkish tone recently set by Governor Michael Barr, who warned that persistent price growth—exacerbated by geopolitical tensions and infrastructure spending—might necessitate decisive action. The internal division within the FOMC is already evident; during the July meeting, three officials dissented in favor of a quarter-point hike. With energy costs remaining volatile due to conflicts near the Strait of Hormuz, the market continues to price in uncertainty. Traders currently estimate a 64% probability of at least one rate increase occurring throughout 2026, even as the immediate pressure for a September adjustment recedes.