Fed's Waller Supports 25-BPS Interest Rate Cut
Federal Reserve Board of Governors Member Christopher J. Waller expressed his support for a 25-basis-point interest rate cut at the upcoming FOMC meeting. In his speech, titled "Cutting Rates in the Face of Conflicting Data," Waller highlighted the growing imbalance between economic growth and labor market weakness.
According to Waller, available economic data shows continued weakening of labor activity, although GDP growth still appears solid. He views this as a signal that the economy is losing momentum, suggesting that monetary policy easing should be considered to maintain labor market stability.
"We are facing conflicting data—strong GDP, but labor indicators are showing a slowdown. In such a situation, moderate policy adjustments can help maintain economic balance," Waller said.
Waller also highlighted the impact of the US government shutdown, which has disrupted the release of several key economic data, making economic assessments more difficult. Therefore, he said that the FOMC must now rely more heavily on private data and market signals in determining policy direction.
Furthermore, Waller emphasized that inflation is currently showing signs of moderation and is slowly moving toward the Fed's 2% target. With price pressures starting to be controlled, he believes the scope for looser monetary policy is increasingly open.
However, Waller emphasized that further action will depend on incoming data. If labor conditions improve, the scope for easing will narrow. Conversely, if the weakening continues and inflation stabilizes, interest rates should ideally be lowered to a neutral level, around 2.75%–3.00%—or around 100–125 bps below current levels.
"Our goal is to maintain a balance between price stability and employment. We must remain cautious about easing policy too quickly," he added.
Waller's statement reinforces market expectations that the Fed will soon cut interest rates by the end of October 2025, with a probability now reaching around 95% according to the CME FedWatch Tool.
Source: Newsmaker.id
