“The robust strength of the labor market and the solid overall performance of the U.S. economy gives us room to tighten policy further,” Waller said in a speech given before a gathering held by The Money Marketeers of New York University.

While noting he supported holding rates steady last month to take stock of how the economy was navigating recent banking sector stress, Waller said it appears those troubles are in the rear view mirror.

Waller said he supports the Fed hiking by two more quarter percentage point increases this year, and noted “I see no reason why the first of those two hikes should not occur at our meeting later this month.”

"If inflation does not continue to show progress and there are no suggestions of a significant slowdown in economic activity, then a second 25-basis-point hike should come sooner rather than later, but that decision is for the future," he added. He noted, “September is a live meeting” for action if inflation is not cooling fast enough.

Waller’s comments follow the release earlier in the week of data that showed inflation pressures at the consumer level are swiftly cooling back toward the Fed's 2% target.

The data didn’t deter financial markets from expecting the Federal Reserve to raise what is now a 5% to 5.25% federal funds target rate at its July 25-26 Federal Open Market Committee meeting. But it did call into question whether the central bank will need to deliver another potentially final quarter percentage point increase at some point later this year, as central bank forecasts from June had penciled in.

Waller said the softer inflation data was a good thing but it’s not enough yet to change the outlook.

“One data point does not make a trend,” Waller said, adding “inflation briefly slowed in the summer of 2021 before getting much worse, so I am going to need to see this improvement sustained before I am confident that inflation has decelerated.”

Waller also said “the labor market is still very robust” and said “wage growth continues to be above what would support returning inflation to 2%.”

The Fed has raised rates aggressively since starting its tightening campaign in March 2022, with many of its moves coming in super-sized increments. The aggressive increases have been aimed at tempering the worst levels of inflation seen in decades.

Over recent weeks officials like Chairman Jerome Powell and New York Fed leader John Williams have flagged the prospect of more increase even as the Fed held rates steady in June to take stock of the impact of its past actions, while some central bankers have been signaling a willingness to stand pat for the time being.