Federal Reserve Governor Christopher Waller stated on Friday that he does not foresee significant inflationary pressure from tariffs, suggesting that the central bank could consider lower interest rates as soon as next month. In an interview with CNBC’s “Squawk Box,” Waller emphasized the need for a cautious approach but advocated for easing rates, highlighting that inflation does not currently pose a substantial threat to economic stability. “I think we’re in the position that we could do this and as early as July,” Waller remarked, though he acknowledged that the Federal Open Market Committee (FOMC) would need to reach a consensus on the matter.
Waller’s comments followed the FOMC’s decision earlier this week to hold interest rates steady, marking the fourth consecutive pause since a cut in December. Former President Donald Trump, who appointed Waller, has been vocal about urging the Fed to reduce interest rates to alleviate borrowing costs tied to the nation’s substantial $36 trillion debt. In his address, Waller argued that proactive cuts are essential to prevent a potential slowdown in the labor market. “If you’re starting to worry about the downside risk to the labor market, move now, don’t wait,” he advised. “Why do we want to wait until we actually see a crash before we start cutting rates?”
The stock market reacted positively to Waller’s statements, showing gains following his interview. However, it remains uncertain whether he will garner enough support from other committee members for his perspectives. The FOMC, including Waller, had previously reached a unanimous decision to maintain the federal funds rate in the 4.25%-4.5% range. Review of the individual projections from the dot plot revealed that the committee is divided: seven members oppose immediate cuts, while others foresee one to three reductions throughout the year.
Trump has been advocating for more aggressive measures, suggesting that the benchmark rate should be lowered by at least two percentage points. Asserting his discontent, Trump criticized Fed Chair Jerome Powell for not supporting more drastic cuts. Waller, however, articulated a methodical approach: “You’d want to start slow and bring them down, just to make sure that there’s no big surprises. But start the process. That’s the key thing.”
Waller noted that the Fed has been in a holding pattern for six months, anticipating a tariff-induced shock to inflation that has not materialized. “We haven’t seen it. We follow the data,” he said, emphasizing that the absence of a significant inflation response suggests a manageable situation. Fed Chair Powell also expressed confidence in the Fed’s current wait-and-see strategy, pointing out that labor market stability continues, despite some signs of decreasing consumer demand.
Current futures market indicators suggest an unlikely scenario for a rate cut during the upcoming July 29-30 meeting, with most expectations leaning toward a potential move in September. As the FOMC navigates this complex economic landscape, Waller’s push for early action reflects a growing urgency to adapt to evolving economic signals amidst uncertainties driven by tariff policies.
Original Source: https://www.cnbc.com/2025/06/20/fed-governor-waller-says-central-bank-could-cut-rates-as-early-as-july.html
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Publish Date: 2025-06-20 18:47:00
