Federal Reserve Governor Waller Says Watching Elevated Core Inflation
While energy prices are the headline over the inflation picture, core inflation is a larger concern that may need to be addressed if it remains elevated, Federal Reserve Governor Christopher Waller said Monday at the New York Association for Business Economics. Waller made his remarks one day before the release of June consumer price data that are expected to show a decline in headline inflation due to falling energy prices, but a further increase in core inflation outside of energy and food prices. "Conventional wisdom among central bankers is to look through one-time price increases, such as those associated with higher tariffs and a jump in oil prices," Waller said. "But, at this point, I am concerned about the elevated pace of core inflation this year, which has steadily moved up -- as measured by the 12-month personal consumption expenditures (PCE) rate -- from 3% in December 2025 to 3.4% in May." Waller said that core inflation remains at a turning point, where further upward movements are possible, but so is a slowdown back toward the 2% goal, with the path of monetary policy depending on it. "Because core inflation is a good guide to future inflation, I am concerned.
While energy prices are the headline over the inflation picture, core inflation is a larger concern that may need to be addressed if it remains elevated, Federal Reserve Governor Christopher Waller said Monday at the New York Association for Business Economics.
Waller made his remarks one day before the release of June consumer price data that are expected to show a decline in headline inflation due to falling energy prices, but a further increase in core inflation outside of energy and food prices. "Conventional wisdom among central bankers is to look through one-time price increases, such as those associated with higher tariffs and a jump in oil prices," Waller said. "But, at this point, I am concerned about the elevated pace of core inflation this year, which has steadily moved up -- as measured by the 12-month personal consumption expenditures (PCE) rate -- from 3% in December 2025 to 3.4% in May." Waller said that core inflation remains at a turning point, where further upward movements are possible, but so is a slowdown back toward the 2% goal, with the path of monetary policy depending on it. "Because core inflation is a good guide to future inflation, I am concerned.