Fed Governor Waller Says Rate Cuts Could Come In As Soon As July

Federal Reserve Governor Christopher Waller reportedly said on Friday that the first rate cut in President Donald Trump’s second term could happen as soon as July.

Waller’s comments come two days after the Federal Open Market Committee kept the rates unchanged despite growing pressure from the U.S. President.

In an interview with CNBC, Waller said inflation is no longer a primary economic concern, making it possible for his colleagues to relax their stance on interest rates.

He added that the Fed should cut rates to prevent a potential slowdown in the labor market.

“If you’re starting to worry about the downside risk labor market move now don’t wait. Why do we want to wait until we actually see a crash before we start cutting rates?” he said.

Post Waller’s comments, benchmark indices surged during Friday’s pre-market session.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.44%, while the Invesco QQQ Trust (QQQ) gained 0.55%.

Waller added that he is in favor of beginning a discussion on easing rates at the next Fed meeting. “We don’t want to wait till the job market tanks before we start cutting the policy rate.”

That said, Waller thinks the committee should move slowly and make sure there are no big surprises.

“We’ve been on pause for six months to wait and see, and so far, the data has been fine. ... I don’t think we need to wait much longer, because even if the tariffs come in later, the impacts are still the same,” he added.

On Wednesday, the FOMC kept the key borrowing rates unchanged in the range of 4.25% to 4.5%.

The rate-setting committee noted that uncertainty surrounding the economic outlook has remained elevated, although it has diminished from its previous forecast.

Despite this, FOMC’s dot plot projections show that policymakers still expect two rate cuts in 2025, although President Trump demanded cuts to the tune of 200 basis points.

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