The latest report released by the U.S. Bureau of Labor Statistics (BLS) reveals that the Consumer Price Index (CPI) in the United States experienced a month-over-month increase of 0.4% in October, surpassing expectations. Christopher Waller, a voting member of the Federal Reserve’s Board of Governors, has suggested a one-time interest rate hike of 50 basis points in response to the prevailing economic conditions.
On November 10, the BLS published a report indicating that while inflation showed a slight decrease in October, it still remains significantly above the Federal Reserve’s target of 2%. The CPI rose by 0.4% in October, down from a more substantial increase of 0.6% in September, but higher than the anticipated rise of 0.3%. When excluding food and energy costs, the core CPI also increased by 0.3%, maintaining the same month-over-month growth as seen in September, but exceeding the forecasted increase of 0.2%.
One notable aspect of this report is that it does not include year-over-year percentage changes for October. This is due to a government shutdown in October 2025 that hindered the BLS from collecting some price data for that month. According to Cody Parkinson, a spokesperson for the BLS, the absence of vital data has made it impossible to calculate year-over-year percentage changes for the CPI and its core components.
During a conference hosted by the King’s College London and the UK Monetary Macro and Finance Society on November 10, Waller expressed that the U.S. economy remains strong and the labor market stable; however, inflation levels continue to be too high. He indicated his support for a rate increase by the Federal Reserve in December.
In remarks shared on the Federal Reserve’s website, Waller stated, “If the monthly inflation rate improves as I expect, I am inclined to support a policy rate increase of 25 basis points.” He went on to assert that if the October CPI data aligns similarly with the previous two months’ readings—maintaining a core CPI increase of around 0.3% or even higher—then stronger policy actions may be warranted.
He elaborated, “In that case, I believe the committee should consider raising the policy rate by 50 basis points at the December meeting.” Waller remarked that if the Federal Reserve only opts for the traditional increase of 25 basis points under such circumstances, it would struggle to bolster confidence in its commitment to curtailing inflation.
Furthermore, Waller emphasized that the Federal Reserve has no intention of raising rates by 150 or 200 basis points, stating, “We do not want to severely damage the economy; we simply aim to recover from the prior three preemptive rate cuts.”
Last month, the Federal Reserve decided to keep interest rates steady, with Chairman Kevin Warsh noting that as more economic information accumulates, policymakers will be better positioned to determine an appropriate level for the policy rate.
Since that meeting, several Federal Reserve officials have spoken out, underscoring the need for further rate hikes. Recent non-farm payroll data revealed a significant acceleration in job growth in October, accompanied by a slight decrease in the unemployment rate. Before the December monetary policy meeting, Federal Reserve officials will have access to a new employment report and a complete array of inflation data.
BeiChen Lin, a senior investment strategist at Russell Investments, commented, “Given that non-farm payrolls exceeded expectations and other signs of economic resilience have appeared, the Federal Reserve’s tolerance for inflation will be very limited.”
Looking ahead to potential actions by the Federal Reserve in the coming year, considerable uncertainty remains. Opinions among senior officials regarding the necessity of further rate hikes in 2027 reflect clear divisions, underscoring the complex landscape of economic policy the Federal Reserve faces as it navigates through persistent inflationary pressures.