Federal Reserve Governor Christopher Waller reiterated his calls for an interest rate cut, telling CNBC that he envisions multiple rate cuts by the central bank over the next three to six months to support a weakening labor market.
Waller was the first Fed official to publicly call for a rate cut in July. He later joined fellow Federal Open Market Committee member Michelle Bowman at the July FOMC meeting in formally voting for a 0.25% reduction in the target range of the federal funds rate, which is the benchmark overnight lending rate that has broad ripple effects on borrowing costs.
During Wednesday’s CNBC appearance, Waller said he wasn’t overly surprised by the drastic downward revision of May and June’s job growth figures by the Bureau of Labor Statistics, as “anecdotal evidence” suggested companies had slowed their pace of hiring and artificial intelligence adoption was eroding job creation.
“Usually when the labor market turns bad, it turns bad fast in a nonlinear fashion. It doesn’t just kind of creep up,” Waller said. “So for me, I think we need to start cutting rates at the next meeting, and then we don’t have to go in a lock sequence of steps — we can kind of see where things are going because people are still worried about tariff inflation. I’m not, but everybody else is.”
He elaborated on his willingness to “look through” the inflationary impacts of the Trump administration’s tariff policies, saying he thinks inflation will start moving closer to the Fed’s 2% target six or seven months from now following a “blip” of price increases.
“You know that you’re going to have this surge of inflation from the tariffs in the short run, but it’s not going to cause long-run inflation,” Waller said. “So why for a one-time level effect do you want to start, say, raising rates and damaging the labor market, the housing market and everything else when you know in say six months it will stop?”
Waller, who has been floated as a potential Fed chair replacement when Jerome Powell’s term expires in May, declined to comment when asked about the ongoing legal drama surrounding his central bank colleague Lisa Cook, who has been accused of committing mortgage fraud.
But he did weigh in on the subject of Fed independence, which some observers have speculated is under threat in light of the Cook allegations and the Trump administration’s blistering criticisms of Fed monetary policy under Powell’s watch.
“The independence of the Fed is critical for everything we do, and you know there are things that are going on that make people worried, but I still believe that we have an independent Fed,” Waller said. He added that central bank appointees will “act in apolitical fashion,” and “no matter what, the Fed will maintain its independence.”
