Federal Reserve Governor Christopher Waller expressed his support for an interest rate cut at the upcoming central bank policy meeting, suggesting he would be open to a substantial reduction if necessary. In remarks prepared for the Council on Foreign Relations in New York, Waller stated that due to progress in inflation and labor market moderation, it was time to lower the target range for the federal funds rate.
This indication from Waller is among the clearest signals that a rate cut is likely to occur at the Federal Open Market Committee meeting on September 17-18. He echoed Fed Chair Jerome Powell’s previous statement that adjustments to monetary policy were necessary at this time. Waller emphasized that decisions on the pace and total reduction in the policy rate would be made in the future, expressing openness to the size and speed of cuts based on data.
Following a weaker-than-expected nonfarm payrolls report, which suggested a slowdown in hiring, Waller highlighted the need for potential aggressive measures to support the labor market as inflation trends towards the central bank’s target. He emphasized the importance of reacting with larger cuts if the labor market deteriorates faster than anticipated, aiming for a “soft landing.”
Waller did not specify the exact amount or frequency of rate cuts he supports but hinted at the possibility of a series of reductions being appropriate given the current economic conditions. Market expectations following the jobs report indicated a higher probability of a quarter percentage point rate reduction in September, with potential more aggressive moves later in the year, as suggested by the CME Group’s FedWatch measure.
