Federal Reserve Governor Christopher Waller has suggested that the central bank should think about cutting interest rates at its upcoming meeting. This recommendation comes as inflation data has shown signs of easing and concerns about the impact of import tariffs are seen as temporary. Waller made these comments during an interview on CNBC, highlighting that recent trends in inflation look promising.
Waller’s stance is particularly notable as President Donald Trump is preparing to select a new Fed Chair to replace Jerome Powell, whose term ends next year. Trump has been vocal in his criticism of Powell, urging the Fed to lower rates and calling Powell “a stupid person.” Waller, who is considered a candidate for the Fed Chair position, may find his support for lower rates aligns with Trump’s wishes.
Waller pointed out that any inflation caused by tariffs is likely to be short-lived and that the Fed should not let it dictate policy. He mentioned that the economic data over the last few months has been encouraging and suggested that the Fed could implement rate cuts as soon as the end of July.
The Federal Open Market Committee (FOMC) recently maintained the interest rate target range between 4.25% and 4.5%. While the committee indicated that they might cut rates twice this year, Waller’s willingness to consider immediate cuts sets him apart from many of his colleagues at the Fed. Powell, in his comments after the FOMC meeting, expressed caution about making any changes due to the uncertainty surrounding the economic outlook, particularly with the evolving trade policies under the Trump administration.
Recent data from the Philadelphia Fed showed a decline in factory activity and hiring, adding to concerns about the economy. Waller noted that with signs of weakness in the labor market, it might be wise to act sooner rather than later to stimulate hiring by cutting rates.
In summary, Waller’s call for potential rate cuts reflects a growing debate within the Fed about how to respond to current economic conditions, as the central bank balances inflation concerns with the need to support job growth.