Fed's Waller (voter) to support holding policy rate steady at September FOMC meeting if August inflation data shows continued progress

• If August inflation data comes in hot, he would consider a September rate hike
• His communicating of reaction function helps public in planning
• Finally seeing some signs of disinflation’ in recent data
• May not take much inflation acceleration to support tighter policy
• If August inflation data shows progress has reversed, ‘small adjustment’ to policy rate would help ensure progress resumes
• GDP growth continuing at ‘solid’ pace, equity price gains should sustain consumption growth
• Considerable uncertainty about how outlook for prices, economy is affected by military conflicts, trade policy, and AI.
• Inflation is significantly elevated above fed’s 2% target
• AI investment is ‘legitimate’ part of GDP; AI will ‘reliably’ raise productivity
• Elevated energy prices, tariffs not a significant sources of ongoing inflation pressure
• Underlying inflation ‘doing better’ than core numbers suggest
• Labour market also in satisfactory shape, expects more of the same in august jobs report
• Sees some upside risk to inflation, though wage growth is consistent with expectation it is returning to 2%
• Personal consumption expenditures and core PCE not best guide for where inflation is
• Sees ‘considerable improvement’ with ‘encouraging’ speed in three-month core inflation.
• Pending revisions to commerce department’s non-market price estimate could lower 12-month PCE by a few tenths of a percentage point.

A named voter publicly pre-committing to a conditional stance ahead of a meeting is a familiar pattern late in hiking cycles, when the debate shifts from direction to whether the bar for another move is low or high. Waller has form here as an official who lays out his reaction function explicitly and in advance, which tends to give his remarks more weight than generic commentary but less than the committee's centre of gravity, since it is the median voter rather than the tails that sets the outcome. The transmission runs through the front end: a low bar for a hike ('small adjustment', 'may not take much acceleration') prices tail risk into the next meeting's OIS, while the baseline of holding steady anchors the nearer tenors. The detail that he leans on three-month annualised core rather than headline or core PCE is the operative tell, because it defines which prints actually move his vote and therefore which releases carry outsized weight into the decision. Worth observing is whether other officials echo the same data-conditional framing, since convergence around a shared reaction function is what has historically repriced the path, and whether the flagged statistical revisions alter the 12-month measures that shape the public narrative. As reaction-function commentary rather than a decision, the signal is conditional and directional.