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Waller Warns 3.4% Core PCE Could Trigger Rate Hike

7/14/2026

43 8 Full Breakdown

Summary

Waller Warns Hike

Fed Governor Christopher Waller warned that a “hot” core PCE reading could force Federal Reserve to raise rates and Federal Open Market Committee to consider tightening.
Core PCE rose to 3.4% YoY in May as labor market was balanced and stable.
CME FedWatch shows a 46.5% chance of a September hike and a 43.3% chance of a July 29 increase while Bureau of Labor Statistics will release June’s CPI on July 14.

Summary

Williams Warns AI

New York Fed President John Williams warned that AI-driven demand for data-center capacity creates a shock the Federal Reserve (Fed) cannot look through.
He cited a hockey-stick rise in semiconductor and electrical-equipment prices as evidence of spending and said the Fed will consider tightening if core inflation stays above 0.2%.
He rejected hikes and noted June CPI report due Tuesday could tip July meeting toward a hike or reinforce patience.

History

Historical Context

Facing the 1970s stagflation, Fed Chairman Paul Volcker raised the federal-funds rate to a June 1981 peak of 20%, driving inflation from a 14.8% high in March 1980 down to under 3% by 1983 while unemployment briefly hit 10.4%. Today, Fed Governor Christopher Waller and NY Fed President John Williams cite that “Volcker shock” as a template for tightening amid AI-fuelled price pressures.

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Waller Warns Hike

Fed Governor Christopher Waller warned that a “hot” core PCE reading could force Federal Reserve to raise rates and Federal Open Market Committee to consider tightening.
Core PCE rose to 3.4% YoY in May as labor market was balanced and stable.
CME FedWatch shows a 46.5% chance of a September hike and a 43.3% chance of a July 29 increase while Bureau of Labor Statistics will release June’s CPI on July 14.

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