Waller Says Fed Should Cut Rates Now With Labor Market on Edge
Federal Reserve Governor Christopher Waller said policymakers should cut interest rates this month to support a labor market that is showing signs of weakness.
“With inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate,” he said Thursday in the text of a speech prepared for an event hosted by the Money Marketeers in New York. “I believe it makes sense to cut the FOMC’s policy rate by 25 basis points two weeks from now.”
Fed officials will gather July 29-30 in Washington.
Waller’s remarks set him apart from most of his fellow policymakers, who have characterized the employment landscape as still solid.
“Looking across the soft and hard data, I get a picture of a labor market on the edge,” he said.
A monthly employment for June, published on July 3, showed a sharp slowdown in private-sector job growth and a deceleration in wage growth, even as the unemployment rate ticked lower. The task of analyzing the labor market has been complicated in recent months by Trump’s rapid crackdown on immigration, which has coincided with an outsize decline in the foreign-born labor force.
Waller is one of two Fed officials, alongside Vice Chair for Supervision Michelle Bowman, who had already signaled their openness to cutting rates as early as this month.
He had previously differentiated himself from other officials by saying he believed the impact of tariffs on inflation would be temporary, and he repeated that view Thursday.
“Policy should look through tariff effects and focus on underlying inflation, which seems to be close to the FOMC’s 2% goal,” he said, referring to the Fed’s rate-setting panel, the Federal Open Market Committee.
Source : Bloomberg
