Fed’s Waller Favors More Rate Cuts, But Warns Against Moving ‘Aggressively And Fast’: Report

Federal Reserve Governor Christopher Waller reportedly said on Friday that he believes the policy rate still needs to be cut further, but cautioned that the approach must be cautious.

In an interview with CNBC, Waller expressed concerns about conflicting signals from economic data, pointing to a weakening labor market even as the gross domestic product (GDP) growth remains strong.

“I’m still in the belief we need to cut rates, but we need to kind of be cautious about it. I want to move towards cutting rates, but you’re not going to do it aggressively and fast, in case you make a big mistake on which way that things go,” Waller stated.

He added that either the labor market must strengthen to match GDP growth, or GDP growth will experience a pullback. Either way, he said, “something’s got to give,” and that it will have an impact on the Fed’s monetary policy.

This comes after the Fed slashed the policy rate by 25 basis points at the Federal Open Market Committee’s (FOMC) September meeting, which was the first cut in 2025. On Wednesday, the minutes of the September meeting showed that over half of the Fed officials favored two more rate cuts in 2025.

Waller said in the interview that he is happy with this pace, but added that he does not think that the Fed should move faster than that. However, on Tuesday, his colleague Stephen Miran noted the Fed’s current monetary policy is very restrictive and called for a series of 50-basis-point rate cuts, adding that he expects a limited impact on inflation from President Donald Trump’s tariffs.

However, in an interview last week, Miran said that he is open to adjusting his view on inflation. “If something were to happen that were to tell me that that channel is invalidated, that there’s some shock that’s going to be pushing rents materially higher, the benign inflation forecast that I have would have to be adjusted as a result,” he said.

Meanwhile, U.S. equities rose in Friday’s pre-market trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.07%, the Invesco QQQ Trust ETF (QQQ) edged up by 0.03%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) rose 0.17%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bearish’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.37% at the time of writing.

Also See: Scott Bessent Reportedly Narrows Down Fed Chair Candidates List To Five

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Share

·

Add us on