Fed Governor Waller Warns: Rate Hikes Still on the Table Despite Easing Inflation

Federal Reserve Governor Christopher Waller issued a notable warning, saying the Fed should not make the mistake of "fighting the last war" — meaning it should not limit its understanding of inflation to the factors that drove it in previous cycles, such as energy price spikes and tariff pass-through effects. He argued that inflationary pressure in the US economy has become broader and more structural, making additional rate hikes a genuine possibility rather than a remote scenario. Waller's stance diverges from the more optimistic tone of other Fed officials, including recent comments from the New York Fed president. For markets, this is a key signal that rates could remain elevated longer than current futures pricing implies, posing risks to growth stocks and bond valuations.