Nobody likes interest rate hikes. Wall Street doesn't like them. Businesses don't like them. President Donald Trump definitely doesn't like them, in part because of their negative impact on the S&P 500.

But sometimes they're necessary. And in just 15 words this past week, Federal Reserve Governor Christopher Waller gave Wall Street a stark warning that now may be one of those times.

Here's what he said and what it means for investors.

Image source: Getty Images.

Waller's line in the sand

Speaking to the New York Association for Business Economics on Monday, Waller got some laughs as he told his audience that "sternly staring at inflation until it melts before our withering gaze is not an ‌option."

But then he addressed the past six months of progressively higher inflation numbers with his 15-word warning: "If I get another higher one, I'm going to treat that as signal, not noise."

With those 15 words, Waller indicated that he wasn't willing to keep writing off inflation above the Fed's 2% target as a temporary byproduct of tariffs or the war in Iran, especially since price pressures seem to be spreading beyond the energy and import sectors into the broader economy.

Of course, one Fed governor can't decide on his own to raise rates. But Waller's comments have been echoed by other Federal Open Market Committee (FOMC) members in just the last few days.

A growing consensus

In a speech on Thursday, Dallas Fed President Lorie Logan outlined her current belief that "modestly higher interest rates would better balance the outlook and risks for the FOMC's dual mandate goals."

Cleveland Fed president Beth Hammack expressed a similar view in a LinkedIn post on Friday, writing:

Inflation is too high. The labor market is right around my level of maximum employment. ... Persistently high inflation is the bigger concern.

She added, "For the first time in my tenure, I'm hearing from businesses who say they think we need to take action to curb inflation, and from consumers who can't make ends meet about a growing sense of despair."

Even Federal Reserve Vice Chair Philip Jefferson joined the chorus. Speaking at the Stanford Institute for Economic Policy Research on Thursday, Jefferson said he would consider raising rates if "actual inflation does not start to cool down soon."

Image source: Getty Images.

What investors should expect

The next meeting of the FOMC is on July 29. Should investors expect a rate hike?

It seems unlikely. FOMC members tend to parse their words very carefully, and their statements indicate they are content to keep rates steady for now but may raise them at the next meeting in September.

Waller, for example, led with the caveat, "If I get another higher one," which didn't happen in June, as the rate fell from 4.2% to 3.5%. Jefferson said he would act if inflation didn't "start to cool down soon." CME FedWatch agrees, putting the odds of a rate hike at just 14.4%.

The likeliest scenario is that the Fed will keep rates unchanged at its next meeting. Still, Fed members are planting seeds about what to expect after that. If inflation doesn't drop significantly in July or August, a rate hike -- and the market disruption that comes with it -- is likely in the fall.