Waller: Would be more worried if energy boosts other prices

Waller: Would be more worried if energy boosts other prices

Federal Reserve Governor Christopher Waller has emphasized that while current inflation metrics are nearing the central bank’s 2 percent target, he remains cautious about potential second-round effects if energy price increases spill over into broader price pressures. In a February 23 speech, Waller noted that underlying inflation—excluding volatile food and energy—has stabilized near 2 percent, but he highlighted the risk of energy-driven wage growth or pass-through effects to other sectors. “If energy costs lead to persistent upward pressure on wages or other goods and services, that would warrant a more cautious policy stance,” he stated.

Waller’s concerns align with broader uncertainties about trade policy and its inflationary implications. Earlier in June 2025, he outlined scenarios where tariffs could temporarily elevate inflation, though he argued their effects would likely be transitory if long-term inflation expectations remain anchored. Recent data, including a stronger-than-expected January jobs report, have eased some labor market risks, but Waller stressed that one month of strong hiring does not yet signal a sustained recovery.

The Federal Open Market Committee (FOMC) will assess February employment and inflation data ahead of its March 17–18 meeting. Waller indicated that if energy-linked price pressures persist or spread, the case for further rate cuts could weaken. Conversely, continued progress on inflation and stabilizing labor market conditions might support a pause in policy adjustments. His remarks underscore the Fed’s balancing act between near-term economic resilience and longer-term risks to price stability.

According to the February 23 speech: Waller, February 23, 2026 speech.
As noted in the June 1 speech: Waller, June 1, 2025 speech.