U.S. Federal Reserve Governor Christopher Waller said on Thursday that he expects to raise the Fed's benchmark interest rate by 75 basis points later this month, while noting that he's open to a larger rate hike.

"Yesterday's report on the consumer price index (CPI) for June was a major league disappointment," Waller said at an event in Victor, Idaho.

On a 12-month basis, CPI in June surged 9.1 percent, up from an 8.6 percent jump in May, hitting a fresh four-decade high, according to data from the Labor Department.

Headline CPI has remained over 6 percent year on year since October last year, and the figure has been over 8 percent since March this year, a stark reminder that the Fed has a long way to go to bring elevated inflation under control.

"We want to reduce excessive inflation, whatever the source, in part because whether it comes from supply or demand, high inflation can push up longer-run inflation expectations and thus affect spending and pricing decisions in the near term," he said. "These decisions can then push up prices even more and make inflation harder to get under control."

The median one-year-ahead inflation expectation increased to 6.8 percent in June, up from 6.6 percent in May, a new series high, according to a survey recently released by the Federal Reserve Bank of New York. Meanwhile, median three-year ahead inflation expectations decreased to 3.6 percent from 3.9 percent.

"We need to avoid expectations rising so much that they become a factor that drives inflation higher," said Waller.

The central bank raised its target federal funds rate by a quarter percentage point from near zero in March, beginning its tightening cycle to curb surging inflation. In May, the Fed increased the rate by half a percentage point. It hiked the rate by three-quarters of a percentage point, or 75 basis points in June, the most aggressive hike since 1994.

"This is the fastest pace of tightening in close to 30 years," Waller said.

The 75-basis-point rate hike was not an "over-reaction" to one data point on inflation - it was primarily the response to "a sequence of excessively high inflation readings since the beginning of the year," the Fed official said.

"It was appropriate given the lack of progress on inflation and clearly signals the FOMC's commitment to get inflation under control as soon as possible," he said. The Federal Open Market Committee, the Fed's policy setting body, consists of 12 members.

The Fed official said that with inflation so high, there is a virtue in front-loading tightening. "Getting there sooner will bolster the public's confidence that we can get inflation down and it will preserve options for adjusting the pace of tightening later if needed," he said.

"With this view, it should not be surprising that looking toward the FOMC's next meeting July 26-27, and with the CPI data in hand, I support another 75-basis point increase," Waller said.

However, the Fed official said his base case for July depends on incoming data, especially on retail sales and housing. "If that data come in materially stronger than expected it would make me lean towards a larger hike at the July meeting to the extent it shows demand is not slowing down fast enough to get inflation down," he said.

Looking forward, Waller said, "I expect monetary policy to be restrictive until there has been a sustained reduction in core personal consumption expenditures (PCE) inflation, which excludes food and energy."

The Fed official noted that uncertainty over how the pandemic could afflict the economy in the future, and global economic risks related to the war in Ukraine are considerable. "These factors could make future policy decisions more difficult than they are today," he added.

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