The market isn't pricing in a rate hike for Waller; it's pricing in his failure.

At the second rate meeting chaired by Walsh, interest rates remained unchanged, the statement was pared down to almost a blank sheet, and at the press conference he was extremely terse, refusing to reveal any policy intentions. He felt his job was done—by saying nothing, the market would “figure it out” on its own.

He wants to return to the Greenspan era’s “constructive ambiguity”—the central bank doesn’t tell you what it plans to do; you interpret the data and set your own prices.

Theoretically, this approach works: if the market pushes up long-term rates due to inflation concerns, mortgage and corporate financing costs will naturally rise, the economy will automatically cool down, and the Federal Reserve doesn’t actually need to raise rates.

Since he chaired his first rate meeting in June, the 30-year US Treasury yield has risen by about 34 basis points. In his view, this means the plan is working.

But he avoided a key question: what exactly is the market pricing in?