Federal Reserve Governor Christopher Waller said he supports cutting U.S. interest rates by 25 basis points at the September 16-17 Federal Open Market Committee meeting. He noted data show early signs of a weakening labor market. Waller said waiting for clear deterioration risks falling behind the curve in monetary policy.
Waller told the Economic Club of Miami that he expects further rate cuts over the next three to six months. He said incoming data will drive the pace of reductions. He views a “neutral” policy rate around 3 percent, well below the current 4.25–4.50 percent range.
The governor said any upward price pressures from tariffs should peak by year-end or early next year. He added that inflation is running close to the Fed’s 2 percent goal when excluding temporary tariff effects. That view strengthens his case for easing soon.
Waller said he does not expect more than a quarter-point cut in September. He added his outlook could change if the Labor Department’s August jobs report shows a sharply weakening economy or if inflation drifts higher. He warned that monetary policy works with long lags.
Waller and Governor Michelle Bowman dissented on July 30 from the Fed’s decision to hold rates unchanged. Both cited concerns about labor market softness. Bowman and Waller were appointed by President Donald Trump, who has publicly pressed Fed Chair Jerome Powell to lower rates further.
Trump this week announced he is firing Fed Governor Lisa Cook over alleged mortgage fraud. Cook calls the move illegal and is suing to block her removal. The action is widely seen as an effort by Trump to increase White House control over Fed policy.
The Fed cut its policy rate by a full percentage point last year beginning in September. Those reductions started before Trump’s election and continued afterward. This year, the Fed has held rates steady amid worries that higher tariffs could reignite inflation above its 2 percent target.
Chair Jerome Powell last week noted a sharp downturn in job growth, averaging just 35,000 per month since May, while unemployment remains low at 4.2 percent. Powell said rising labor market risks may warrant “proceeding carefully” on policy adjustments. Markets widely interpreted his remarks as signaling a September rate cut.
Waller said he fully expects more cuts as labor market softness increases and growth remains slow in the second half of the year. He added that signaling future cuts now would help prevent policy from falling behind economic shifts. He said it is just a question of how fast the Fed moves toward neutral.
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