Federal Reserve Governor Christopher J. Waller said Tuesday he would support a 25 basis point increase in the central bank’s policy rate at the December 8 and 9 Federal Open Market Committee meeting, and that a 50 basis point hike should be considered if October inflation lands near the past two monthly readings. He spoke in London at the Bank of England Watchers Conference, hours before the Bureau of Labor Statistics released the October Consumer Price Index at 8:30 a.m. Eastern time. He framed the larger move as a credibility question, saying that hiking only 25 basis points would put the Committee’s credibility at risk. That matters because the prime rate, which banks peg 3 percentage points above the top of the federal funds target range, has held at 7.00 percent. A quarter point hike lifts it to 7.25 percent. A 50 basis point move takes it to 7.50 percent, and card issuers reprice variable balances within one or two statement cycles. The Committee held its range at 3.75 to 4.00 percent on October 28 over two dissents, with Waller in the majority. His remarks are the clearest signal yet from a sitting governor that the next move at the December meeting is up, and that only its size is open.
- Waller backs a 25 basis point hike at the December 8 and 9 FOMC meeting.
- He says 50 basis points should be considered if October core CPI nears 0.3 percent.
- A 25 point hike alone would risk the Fed’s credibility, he told the London audience.
- Prime is 7.00 percent, heading to 7.25 or 7.50 percent on a December hike.
- Cook and Hammack dissented October 28, preferring a quarter point rise.
What Waller Said in London
The conference was hosted by King’s Business School and the Money, Macro and Finance Society, and the speech was titled “The Economic Outlook and Some Thoughts on Labor Market Dynamism.” The policy section was direct. Waller said he is leaning toward supporting an increase in the policy rate of 25 basis points at the FOMC’s December meeting, and that he would still support it even if October inflation improves on September. He then went further. If the October CPI data come in similar to the past two monthly readings, with core CPI inflation around 0.3 percent or even higher, Waller said a 50 basis point hike should be considered, because hiking only 25 basis points would put the Fed’s credibility at risk, a risk he said he is not eager to take.
The credibility line is what separates Tuesday’s remarks from Waller’s earlier comments. He has argued that further tightening of monetary policy will be needed, sooner rather than later, to return inflation to the Fed’s 2 percent medium term goal. What he added in London is a threshold. He named a data condition, a monthly core CPI print around 0.3 percent or above, and attached a policy response to it. He also left room above 50 basis points, saying that if inflation comes in substantially higher than he expects, more robust action may be called for. Waller is one voice on a 12 member voting Committee, and he backed the majority in holding policy in October.
The Inflation Data Behind the 50 Point Case
The figures Waller cited come from September. Personal consumption expenditures prices rose 0.5 percent in the month and 3.7 percent over the previous 12 months. The core measure, which strips out food and energy, rose 0.3 percent in September and 3.1 percent from a year earlier. His concern is breadth more than any single print. More than 70 percent of core PCE service price components saw 12 month increases above 3 percent in September, a dispersion hard to pin on a few volatile categories. The Bureau of Labor Statistics reported CPI for all items rose 0.6 percent in September and 3.7 percent over the year, with all items less food and energy up 0.3 percent in the month.
Energy is the second thread. Waller said insurance costs and ship to ship transfers are reportedly boosting oil prices by $20 to $30 a barrel, and that the effect could be larger than previously thought and persist well into 2027 if oil prices stay elevated. Diesel, he said, is not expected to moderate as readily as crude. Energy prices fell over the past week or so but remain quite elevated against the start of the year. That 0.3 percent core reading is the level Waller named as his condition for considering 50 basis points, which is why Tuesday’s release carried unusual weight. Our inflation tracker follows each reading as it lands.
Where the Committee Stands
Waller is not arguing in a vacuum. At the October 28 meeting the Committee voted 10 to 2 to maintain the target range for the federal funds rate at 3-3/4 to 4 percent. Lisa D. Cook and Beth M. Hammack dissented, both preferring to raise the range by 1/4 percentage point at that meeting. Two voting members were already on record wanting a hike six weeks before December. Waller has now added himself to the group pointing the same way, having voted to hold. That puts three of the 12 voters on the record leaning toward tightening, before counting members who have not spoken since October.
The December 8 and 9 meeting carries a Summary of Economic Projections, so participants will publish fresh estimates of where the policy rate sits at the end of 2026, 2027 and 2028. That raises the stakes on the size of any move, because those figures will show whether the inflation breadth Waller described has shifted the Committee’s medium term path or only its next step. The Fed’s H.15 release dated November 9 put the effective federal funds rate at 3.88 percent and the bank prime loan rate at 7.00 percent as of November 6. The 10 year Treasury yield stood at 4.86 percent that day, and the 10 year minus 2 year spread was 0.32 percentage points on November 9.
What a December Hike Does to Your Rates
The prime rate turns an FOMC decision into a household bill. Banks set prime 3 percentage points above the top of the federal funds target range, so with the range at 3.75 to 4.00 percent, prime is 7.00 percent, where the Fed’s H.15 release has it as of November 6. A 25 basis point hike on December 9 moves prime to 7.25 percent. The 50 basis point move Waller says should be considered moves it to 7.50 percent.
Variable rate consumer debt follows prime almost mechanically. Most credit card APRs are quoted as prime plus a margin, so a 25 basis point increase adds about $25 a year in interest for every $10,000 of revolving balance carried, and 50 basis points adds about $50. Home equity lines reprice the same way. Fixed rate products behave differently. A personal loan already closed does not change, and mortgage rates track longer dated Treasury yields rather than prime, which is why a December hike could land alongside mortgage rates moving the other way. Savers gain. Yields on savings accounts and certificates of deposit tend to follow the funds rate higher, though banks pass increases through more slowly than card issuers do. Our guide to how Fed decisions affect your loans breaks this down by product.
If you carry a variable rate balance, use the window between now and December 9. Check whether your cardholder agreement quotes your APR as prime plus a margin. If it does, map what 7.25 percent and 7.50 percent prime would do to your interest cost. Borrowers who expect to carry a balance into 2027 should price a fixed rate consolidation before the vote rather than after it, because fixed offers move on the forward curve instead of on the announcement.
Frequently Asked Questions
Is the Fed raising interest rates again?
Not yet, but the direction has shifted. The Federal Open Market Committee held its target range at 3.75 to 4.00 percent on October 28, and Governor Christopher Waller said on November 10 that he would support a 25 basis point increase at the December 8 and 9 meeting. Two members already dissented in October in favor of a hike. Nothing changes for borrowers until the Committee votes, and one governor does not set policy alone. All 12 voting members decide in December.
What will the interest rate be in December 2026?
The federal funds target range is 3.75 to 4.00 percent going into the December 8 and 9 meeting, and the prime rate is 7.00 percent. A 25 basis point increase would set the range at 4.00 to 4.25 percent and prime at 7.25 percent. A 50 basis point increase would put the range at 4.25 to 4.50 percent and prime at 7.50 percent. No decision has been made. The meeting also carries a fresh set of projections covering the expected rate path through the end of 2028.
Will interest rates go down?
Not on the path Waller described. He said further tightening of monetary policy will be needed, sooner rather than later, to return inflation to the Fed’s 2 percent goal, and that energy effects could persist well into 2027. September core PCE ran at 3.1 percent over 12 months, well above target, and two officials dissented in October wanting a hike. Longer dated yields can still fall on their own, so mortgage pricing may ease even in a tightening cycle, but variable rates tied to prime would rise.
What happens to the prime rate if the Fed raises by 50 basis points?
Prime would go from 7.00 percent to 7.50 percent, almost certainly within a day of the announcement. Banks set the prime rate 3 percentage points above the top of the federal funds target range and move it in lockstep, so a 50 basis point hike on December 9 passes straight through. The Fed’s H.15 release reported prime at 7.00 percent as of November 6. Credit cards, home equity lines and other prime linked products would then reprice at the start of each account’s next billing cycle.
How much more will my credit card cost after a December rate hike?
For every $10,000 of balance you actually carry, a 25 basis point hike adds roughly $25 of interest a year and a 50 basis point hike adds roughly $50. The increase applies to the balance you revolve, not your credit limit, so paying in full means no change at all. Most card agreements set the APR as prime plus a fixed margin, and that margin does not move. Check your agreement for the formula, then apply 7.25 or 7.50 percent prime to estimate your new rate.
When is the next Fed meeting, and when would a hike reach my account?
The next FOMC meeting runs December 8 and 9, 2026, with the decision released on the second afternoon alongside a Summary of Economic Projections. Banks typically adjust prime the same day or the next business day. Variable card APRs and home equity line rates then change at the start of the following cycle, so most households would see it on a January statement. Savings and certificate of deposit yields usually take longer, often several weeks, because deposit repricing is at each bank’s discretion.
Watching the December 8 Vote and the Data Before It
Two things decide the December outcome. The first is the inflation path the October and November CPI reports describe, measured against the 0.3 percent monthly core threshold Waller named. The second is whether other voters follow Cook and Hammack onto the hawkish side. Track the running level on our current prime rate page, the decision history on the Fed prime rate dashboard, and the scenarios on our 2026 Fed rate forecast.
References
- Federal Reserve Board. Waller speech, “The Economic Outlook and Some Thoughts on Labor Market Dynamism,” November 10, 2026. federalreserve.gov
- Federal Reserve Board. “FOMC statement,” October 28, 2026. federalreserve.gov
- Federal Reserve Board. “H.15 Selected Interest Rates,” November 9, 2026. federalreserve.gov
- Federal Reserve Board. “FOMC Calendars and Information.” federalreserve.gov
- U.S. Bureau of Labor Statistics. “Consumer Price Index.” bls.gov
- FRED, Federal Reserve Bank of St. Louis. “Bank Prime Loan Rate.” fred.stlouisfed.org
- U.S. Treasury, Fiscal Data. “Debt to the Penny.” fiscaldata.treasury.gov
