Waller Floats Half-Point Hike After 0.3% Core CPI

Inflation picked the same number three months running, and the Fed noticed. The Bureau of Labor Statistics said Tuesday that core consumer prices climbed 0.3% in October, the same as in August and September ^[1].

Speaking in London the same day, Governor Christopher Waller said a third reading like that would push him beyond a quarter point, calling for a 50 basis point hike to be considered at the December meeting ^[2].

How we got here

• Headline CPI rose 0.4% in October after a 0.6% jump in September ^[1].
• Shelter rose 0.3%, with owners' equivalent rent up 0.3% and rent up 0.2% ^[1].
• Energy rose 0.7% in October after surging 5.2% in September ^[1].
• Waller said PCE inflation ran at 3.7% over the 12 months through September, with core PCE at 3.1% ^[2].

But not every Fed official is on the same page about speed. Vice Chair for Supervision Michelle Bowman, speaking in Washington, said there is still work to do on inflation, yet she expects tariff, energy and AI price effects to fade and core PCE to move nearer 2% next year ^[3]. She added that policy is not on a preset course ^[3].

What it means for you

Mortgage rates track longer bond yields more than the Fed's overnight rate, but hike talk tends to push both up. Freddie Mac's latest 30-year average is 7.18% ^[4]. By our math, a $400,000 loan at that rate costs about $2,710 a month, and half a point higher it costs about $2,846, or roughly $137 more. If you are locking soon, compare a lock now against floating into the December decision.

Zoom out

The Fed held its target range at 3-3/4 to 4 percent in October, Bowman noted ^[3]. Bowman said the next PCE report and the November jobs report arrive before the December meeting ^[3].