Waller backs December Fed hike, Bitcoin falls 3% to $73,235

Fed Governor Christopher Waller said on Tuesday he supports a 25 basis point rate hike in December and that substantially hotter inflation could call for more robust action. Bitcoin fell 3% in 24 hours to $73,235.

Why he voted to hold in October

In a speech on Tuesday, Waller explained that he voted to hold rates at the October FOMC meeting because markets had already priced in some tightening based on Fed communication. In his view, hikes do not need to come at consecutive meetings, but they must be carried out within a reasonable period.

If the promised hikes are not delivered, markets will cut their expectations and rates will fall immediately, loosening monetary policy in an undesirable way, he warned.

What he expects in December

Waller spoke hours before the October CPI release. He said he would support a 25 basis point increase at the December meeting even if the data improved on September.

If inflation comes in "substantially higher" than he expects, "more robust action" by the FOMC may be called for, he added.

September inflation data

Waller called the September inflation data "bad" with "no silver lining" and said he is particularly concerned about the breadth of price increases.

• Headline PCE: +0.5% in September, +3.7% over the past 12 months
• Core PCE: +0.3% monthly, +3.1% year over year
• More than 70% of core PCE services components posted 12-month increases above 3%
• Core goods prices and core market-based services ex housing are both elevated

Labor market stable but less dynamic

Waller sees the labor market as stable and close to the Fed's maximum employment goal, but describes it as "low hire, low fire".

• Real GDP: +3.4% in Q3, initial estimate
• Unemployment rate: 4.1% in October
• Payrolls: +165,000 in October, plus 85,000 in revisions to the prior two months
• 6-month and 12-month average: roughly 80,000 jobs per month

He pointed to uncertainty around AI, tariffs and immigration policy as possible reasons for restrained hiring. The share of unemployed people looking for work for more than six months has climbed steadily since 2022, and new labor force entrants are finding it harder to land jobs.

BTC and ETH reaction

Bitcoin trades 41.9% below its all-time high of $126,080, with 24-hour trading volume of $27.3B and a market cap of $1.47T.

ETH sits 59.1% below its all-time high of $4,946, with 24-hour volume of $12.3B and a market cap of $247.4B.