The key facts

  • Lorie Logan: the Fed needs at least two 25-basis-point hikes, then a pause to assess
  • Christopher Waller floated a 50-basis-point hike in December if core inflation rises 0.3% or more
  • US inflation in October was 0.4%, core — 0.3% for the third month in a row

Two 25-point hikes or one of 50

Lorie Logan, president of the Dallas Federal Reserve Bank, said on Tuesday at a joint energy conference of the Dallas and Kansas City Fed branches in Houston that the Federal Open Market Committee (FOMC) should deliver 'at least two rate hikes of 25 basis points each,' after which it should pause to assess whether further tightening is needed. According to her, the hikes could proceed at a faster pace this winter, Anadolu reports.

Waller floated a 50-basis-point move

The same day, Fed governor Christopher Waller, speaking in London before the October inflation release, said he would support a quarter-point hike even if October inflation turned out to be moderate. However, in his assessment, a monthly rise in core consumer inflation of around 0.3% or higher would justify considering a stronger response: 'I believe a 50-basis-point rate hike should be considered at the December meeting,' he said, warning that a smaller move in such a scenario could undermine confidence in the Fed.

October data strengthened the 'hawks' arguments'

Data from the Bureau of Labor Statistics, released later on Tuesday, showed consumer prices rose 0.4% in October after 0.6% in September. Core inflation, excluding food and energy, came in at 0.3% for the third month in a row — exactly at the threshold Waller had named. Housing prices rose 0.3%, accounting for more than 30% of the monthly index increase, food prices climbed 0.5%, and energy rose 0.7%.

Context: the September hike and the October split

In September, the Fed unanimously raised its benchmark rate by 25 basis points to a range of 3.75–4%, and in October left it unchanged. The October decision passed with a 10–2 vote: governor Lisa Cook and Cleveland Fed president Beth Hammack argued for another quarter-point hike. Waller also cited data on his preferred indicator — the personal consumption expenditures deflator: in September, inflation on that measure was 3.7% year over year, with core at 3.1%, both above the Fed's 2% target. He described economic growth as strong and the labor market as stable, expressing concern that price pressure is becoming broader.