Fed Governor Waller expresses concern about inflation while considering a potential December rate cut.

Federal Reserve Governor Christopher Waller stated on Monday that he expects an interest rate reduction in December, but he is concerned about recent inflation trends that may cause him to alter his decision.

According to Waller, based on current economic data and forecasts predicting a decline in inflation to 2 percent over the medium term, he is inclined to support a reduction in the policy rate at the upcoming December meeting.

Whether the decision will be made depends on whether the data received beforehand will surprise positively and change my forecast for inflation's path.

Recent data suggests that inflation progress may be slowing down, according to Waller.

In October, the Fed's preferred inflation indicator, the personal consumption expenditures price index, showed headline inflation increasing to 2.3% annually and core prices, which exclude the cost of food and energy, rising to 2.8%. Despite this, the Fed's target inflation rate remains at 2%.

Despite meeting Wall Street expectations, the data revealed a rise from the previous month, indicating that the central bank's objective remains unattained despite progress.

"I feel like an MMA fighter in a chokehold with inflation, constantly waiting for it to tap out, but it always slips away at the last second," Waller said, referring to mixed martial arts. "However, I want to assure you that submission is inevitable — inflation won't be able to escape the octagon."

The Fed is expected to reduce its benchmark overnight borrowing rate by another quarter percentage point when it meets on December 17-18, following a half-point cut in September and a quarter-point reduction in November.

Waller stated that he is inclined to continue with the ongoing work of adjusting monetary policy to a more neutral stance.

Waller stated that he will closely monitor the employment and inflation data, as the Bureau of Labor Statistics will release reports on job openings and nonfarm payrolls this week, including the October gains in payrolls which were only 12,000, largely due to labor strikes and weather issues.

Despite the slowing progress on inflation, Waller believes that the broader economic health warrants continuing to ease monetary policy.

If we reduce by 75 basis points, I am convinced that the policy remains excessively restrictive, and further cuts will merely mean we're not applying the brakes as firmly.