① Federal Reserve Governor Christopher Waller advocated for a continued interest rate cut in December due to the ongoing risk of a slowdown in employment and anticipated further decline in inflation; ② Waller’s remarks contrast with those of several Fed officials, who even warned that this week’s rate cut might have been too aggressive as inflation risks persist.
Federal Reserve Governor Christopher Waller stated that, given the risk of a sustained slowdown in employment, the U.S. central bank should continue cutting interest rates at its next meeting in December.
On Friday local time (October 31), Waller said in an interview: “Our biggest concern right now is the labor market. We know that inflation will continue to fall, which is why I am still advocating for a rate cut in December — all the data tells me we should do so.”
Waller's remarks contrasted with statements made by other Fed officials on the same day. They warned that the decision to cut interest rates earlier this week may have already been too aggressive, primarily due to the persistent risk of inflation.
This Wednesday, the Federal Reserve announced a reduction of 25 basis points in the target range for the federal funds rate to between 3.75% and 4.00%, in response to the sharp cooling of the job market during the summer. This follows another 25-basis-point cut on September 17.
However, at the press conference following the policy decision, Federal Reserve Chair Powell warned that further rate cuts are not guaranteed, citing disruptions in economic reports caused by government shutdowns and noting significant divisions among monetary policymakers.
In the interview, Waller downplayed the potential inflationary risks posed by tariffs, stating, “If we exclude the temporary tariff effects as estimated, according to the PCE (Personal Consumption Expenditure) index we focus on, the inflation rate is approximately 2.5%.”
“The inflation rate has indeed not yet reached 2%, but it is not far above it, and we expect it to decline further.”
Waller was appointed to the Federal Reserve Board by President Trump in 2020 and is currently one of five candidates under consideration by the White House to succeed Powell as Federal Reserve Chair when his term ends in May next year.
This year, Waller has been calling for interest rate cuts earlier than most of his colleagues. He believes that tariffs will only cause a one-time price shock, and the Federal Reserve should prioritize addressing employment risks. In July, he cast a dissenting vote against the decision to keep interest rates unchanged.
"If the president invites me, I am willing to serve," said Waller. "I agreed the last time he asked me, and if he asks again, I will agree once more."
Editor/Doris