Federal Reserve Governor Christopher Waller has once again voiced his support for potential interest rate cuts in September, suggesting that further reductions might be necessary within the next three to six months to safeguard the labor market.
“Given the data we have right now, I would back a 25 basis point cut at the committee meetings scheduled for September 16th and 17th,” he stated during preliminary remarks at an event for the Miami Economic Club.
“There are indications that the labor market is weakening. However, I’m concerned that the situation could worsen more quickly than anticipated. I think it’s crucial for the Federal Open Market Committee (FOMC) to act before the situation worsens and we risk lagging behind in appropriate monetary policy,” added Waller.
He was one of two governors who opposed the board’s recent choice to maintain interest rates between 4.25% and 4.5%, marking the first time in over three decades that two members have expressed dissent.
Waller, appointed by Trump, may be eyeing the position of the current Fed Chairman, Jerome Powell, who has criticized the president for his reluctance to cut rates. Powell’s term is expected to end in May and he hinted last week that rate cuts could be on the way.
“We believe that cuts should have happened in July, but our aim is to ease monetary policy at the next meeting to prevent any further decline in the labor market while also steering inflation back to the FOMC’s 2% target,” Waller remarked. “So, let’s address that.”
He emphasized that any interest rate cuts should not exceed 25 basis points, though this stance could be reassessed if the employment report for August indicates significant economic weakness.
“The FOMC’s decision to initiate this process in July was based on available data, but I doubt there will be a 25 basis point cut in September,” he said. “Of course, I could change my mind if the upcoming August employment report—coming out a week from tomorrow—shows noticeable economic deterioration and inflation trends.”
Following a weak employment report in July and notable downward revisions in previous months, President Trump dismissed Director of Labor Statistics Erica Mantelfer, claiming he manipulated figures to undermine the administration.
In response, Trump nominated Eji Antoni, a head economist and fellow at the Heritage Foundation, for the position, which will require Senate approval.
