"If we get another high core inflation reading this week, then the FOMC will need to consider tightening monetary policy soon," Waller said on Monday.
The Fed will decide on interest rates again on July 29. The market has now priced in a 41.2 percent probability of a 0.25 percentage point increase to a range of 3.75-4.00 percent, according to research firm CME FedWatch.
Inflation is well above the Fed's 2 percent target, driven by import tariffs, energy prices, and the rapid expansion of AI infrastructure.
"No matter how you look at it, or whatever measure you choose to use, inflation has risen this year. At the moment, I am concerned about the high rate of core inflation," Waller said.
