Fed board member opens door to 1 point hike

WASHINGTON — Christopher Waller, a member of the Federal Reserve’s Board of Governors, said Thursday that he would be open to supporting a huge 1 percentage point increase in the Fed’s key short-term interest rate later this month if upcoming economic data points to robust consumer spending.

Such an increase would mark a further ramping up of the Fed’s rate hikes as it intensifies its fight against accelerating inflation. Faster rate increases would heighten the risk that the central bank’s anti-inflationary policies would cause a recession. The Fed hasn’t raised its rate by 1 percentage point in several decades.

In a speech in Victor, Idaho, Waller said he still supports a 0.75 percent point increase at the central bank’s next policymaking meeting in two weeks, even after a government report Wednesday showed consumer inflation accelerating to a new 40-year high.

But further economic data — including a report Friday on June retail sales and several reports on home sales and prices — will be released before the Fed’s next meeting. If those figures “come in materially stronger than expected,” Waller said Thursday, “it would make me lean towards a larger hike.“

Wednesday’s inflation report showed that prices spiked 9.1 percent in June from 12 months earlier, the biggest such increase since 1981. Though much of the inflation was driven by higher costs for food and gas, price increases were widespread and in many cases accelerating in such areas as rents, restaurant meals, and medical services.