A Fed Governor Called the Latest Inflation Data ‘Borderline Disturbing.’ A Half-Point Hike is Now Firmly on the Table.

Another Federal Reserve chair is raising alarms about the inflation trend, particularly following the October report, which surprised to the upside.

Chicago Federal Reserve President Austan Goolsbee told PBS that the data was "borderline disturbing."

"We've got a real inflation issue on our hands that has been developing," Goolsbee added. "We're going to have to deal with that."

He went on to say that he expected price drivers like tariffs fade over times, but that hasn't happened. Stubbornly high inflation on services are another source of concern. "It's on business mind. It's on nonprofits' minds. It's on ordinary consumers' mind," he said.

Elsewhere, Federal Reserve Governor Christopher Waller said that he would be open to a 50 bps rate hike in December if inflation came in hotter than expected. That's what happened on Tuesday.

"In that case, I believe a 50 basis point hike in the policy rate should be considered at the December meeting," Waller said before the report was released. "Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take," he added.

The Bureau of Labor Statistics detailed that the Consumer Price Index climbed 0.4% last month, compared to the 0.3% expected by analysts. Core CPI, which excludes more volatile components like food and energy, also climbed 0.3%, compared to the 0.2% expected.

Waller went on to say that Fed communications before and at the October meeting led markets to price in more hikes. "When this communication is clear and credible, what really matters is that those hikes are eventually carried out — it is not necessary, for example, to raise rates at consecutive meetings," Waller claimed.

"If, however, the hikes are not carried out, markets will reduce expectations of rate hikes and rates will immediately fall, which would loosen monetary policy in an undesirable way," he added, saying that hikes "will be needed sooner rather than later."

Odds of a half-point hike are now in play. Chances of a 25 bps decision stand at 86.8% on Wednesday, according to the CME Group's FedWatch tool. But the other odds do not involve a pause, rather than a 50 bps increase. They now stand at 13.2%.

Earlier this month, Richmond Federal Reserve President Thomas Barkin said he expects the central bank to continue hiking rates, but is unsure about the pace or the amount of such decisions.

Speaking to CNBC, Barkin noted that "unemployment is near record lows, and inflation is too high," making the decision "pretty straightforward."

"The question, of course, is pace," he added. "Gradual makes sense if you think there's uncertainty in the world, and if you think that there's information you're going to get in the period. And I think that's still a pace that makes sense to me."