Waller hikes rates, forced to go head-to-head with Trump!

The first rate hike in three years, passing unanimously with all 12 votes.
The federal funds rate rose from 3.50%–3.75% to 3.75%–4.00%. The first move since July 2023.
Waller’s statement was short and forceful, just over a hundred words.
The economic assessment was very firm: growth is steady, domestic demand is resilient, productivity is strong, capital spending is robust, employment is holding up, and the unemployment rate has barely moved. Then came one sentence that killed all wishful thinking: inflation remains elevated.
Today’s move is aimed at getting prices back to 2% faster.
Geopolitics got only one mention: “uncertainty remains elevated.” The Middle East and oil prices were not named, but everyone knows where the oil is.
The real knife was the dot plot.
Of the 18 dots, 16 see at least one more hike this year.
Twelve see 4.1% at year-end, meaning another 25 basis points; four directly see another 50 basis points, and only two think this hike is enough.

No one plotted a rate cut.
Median path:
 ➫4.1% by the end of 2026
 ➫Still 4.1% by the end of 2027
 ➫3.9% only by 2028
 ➫Long-run neutral rate of 3.2%
Put plainly: high interest rates are not transitional; they are the norm for the next phase. Don’t expect rate cuts in 2027.
PCE inflation is seen at 3.7% this year, core PCE at 3.4%, with the 2% target pushed out to around 2029, while the unemployment rate stays pinned at 4.1%. Waller himself was vague, but the committee has collectively turned hawkish.
Waller’s press conference was even tougher than the statement.
His exact words were almost entirely substance:
 ➥Inflation is too high, and it has lasted too long. The data from this summer showed no meaningful improvement in underlying trends. Financial conditions can hardly be called tight, so today’s move was not “additional tightening”; it was removing a dose of easing.
He cannot control oil prices. What he can control is preventing relative-price increases from spreading into second- and third-round effects.
Will there be another hike? No forward guidance—let the data speak.
Waller came out pretty tough, opposing the White House for the first time by hiking rates. Trump wants rate cuts; he hikes. Only they know how to manage the relationship—or perhaps it is all political theater.
Crypto did not bounce.
Because the Senate failed to pass CLARITY the previous day, leverage had already been washed out once, so there was no textbook crash that night.
The 10-year Treasury yield has already touched 5%, and Treasuries have become more attractive than stocks or crypto. With the Fed also saying rate cuts are unlikely in 2027, the cycle of Fed liquidity injections and rate cuts has been pushed further out.
➣Short term: Volatility is coming; don’t mistake a relief rally for a reversal.
➣Medium term: The macro narrative is shifting from “waiting for rate cuts” to “higher for longer.” Pay closer attention to on-chain capital flows, ETF flows, and net stablecoin issuance.

The reason there had been no rate hike for three years was not that inflation had improved, but that the committee had been waiting for a window in which it could act. Oil prices provided the window, and Waller provided the execution.
Opportunities have to be waited out. The Fed will definitely inject liquidity; that will be our time to lie flat!