Fed’s Waller: Further hikes don’t need to come at consecutive meetings

Federal Reserve (Fed) Governor Christopher Waller said in a speech at the Central Bank of the Republic of Türkiye (TCMB) Istanbul Economic Forum on Thursday that more interest rate hikes are needed as inflation remains too high.

Comments

More hikes needed but flexible about the pace.

Inflation too high, with AI buildout, ongoing energy shock among a range of persistent inflationary forces.

Evidence that economy is strengthening in the second half of 2026.

Concerned high inflation, now approaching 5-1/2 years above target, will put inflation expectations at risk.

Labor market "solid and stable" in September even though number of jobs created was down.

Fed communications can avoid the promises of forward guidance, but still improve outcomes with "signaling" to markets about possible policy choices.

Market reaction

No major reaction is seen in the US Dollar (USD), following remarks from Fed's Waller. As of writing, the US Dollar Index (DXY) is marginally higher to near 102.30.

Waller flags more hikes but flexible pace, keeping Dollar bulls engaged

Fed’s Waller delivered a distinctly hawkish tone, with an FXS Speechtracker score of 8/10, stronger relative to the historical average of 7.2/10. The insistence that “more hikes [are] needed but flexible about the pace,” alongside comments on persistent inflation drivers from AI buildout and energy shocks, signals a bias toward further tightening even if not at consecutive meetings. Emphasis on a strengthening economy, a “solid and stable” labor market, and risks to inflation expectations reinforces a policy stance that supports the Dollar on balance.

The FXS Fed Sentiment Index rose by 0.42 points to 138.34, firmly in hawkish territory well above the neutral 100 mark, consistent with the elevated FXS Speechtracker reading. This incremental move higher underscores that markets are likely to price a more extended period of restrictive policy, a backdrop that should remain broadly supportive for the Dollar versus the Euro and Yen.