Fed Governor Christopher Waller said Thursday he would support holding rates steady at the central bank's meeting in two weeks if August inflation data continue the recent progress seen in June and July, but that he could favor a rate increase if that progress reverses.

Recent data have shown signs of improvement on inflation, and "if this continues in the data due over the next two weeks, I would be inclined to support holding the target for the federal funds rate at its current setting," Waller said in remarks during a Reuters virtual event.

Waller pointed to uncertainty, however, over how military conflicts, trade policy, and artificial intelligence would influence the economy. "If inflation comes in hot, I would consider a rate hike," he said. The Fed held rates steady in July, but three officials voted to raise rates.

The remarks marked a slight shift in tone from July, when Waller said the Fed was at "a crossroads" and, sounding less patient, said the central bank would need to consider tightening if evidence materialized of firmer inflation; he described the cases for accelerating and decelerating inflation as equally plausible. On Thursday, Waller continued to outline a low bar for raising rates, but said the recent data hadn't necessarily cleared it. He pointed to how a short-term measure of underlying inflation had fallen to around 3%, from 4.76% in February.