The Federal Reserve is positioned to potentially cut interest rates as early as July, according to Fed Governor Christopher Waller.
Waller, a current member of the Federal Open Market Committee that votes on interest rate policy, said during an interview with CNBC on Friday that he thinks longer-term inflation trends support a “good news” rate cut, perhaps “as early as July.”
“Right now, the data of the last few months has been showing that trend inflation is looking pretty good, even on a 12-month basis,” Waller said. “I think we’ve got room to bring [rates] down, and then we can kind of see what happens with inflation. If it got really bad and people got very nervous, you could just pause. But I think we’re in a good spot right now for talking about bringing the rate down.”
Waller’s comments will likely put even more pressure on Fed Chairman Jerome Powell, who has found himself in the social media crosshairs of both President Donald Trump and Bill Pulte, director of the Federal Housing Finance Agency. Pulte made particularly forceful accusations this week, calling for the Fed chair’s resignation and blaming Powell for stoking a housing supply crisis by keeping interest rates elevated.
And Waller’s rate-cut suggestions sound similar to remarks Trump made at the White House last week, when the president advocated for cutting rates now and raising them later if inflation worsens.
“Let’s say there was inflation in a year from now,” Trump proposed. “Raise your rates. I don’t mind.”
The Federal Reserve typically cuts the benchmark federal funds rate during periods of easing consumer prices and raises it to cool inflation, although the central bank is also tasked with promoting stable employment trends as part of its dual mandate.
In April, the personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, rose 2.1% year over year, which is close to the central bank’s target inflation rate of 2%. Meanwhile, the unemployment rate stood at 4.2% in May, according to the U.S. Bureau of Labor Statistics, which is generally considered close to “maximum employment” by economists.
On Wednesday, the Fed announced that it would not cut interest rates in June. Powell defended the move by saying that the inflationary effects of the Trump administration’s tariff policies could be persistent, driving up consumer prices over the long run.
“Our obligation is to keep longer-term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem,” Powell said in prepared remarks Wednesday.
Waller acknowledged tariffs will likely result in a one-time spike in inflation. But the Fed governor does not think tariffs will lead to long-term inflation problems, arguing that they should cause a “one-off level effect and not cause persistent inflation.”
