Federal Reserve Gov. Christopher Waller said Friday that policymakers should consider lowering interest rates as early as next month, as they don’t think tariffs will significantly raise inflation.
In an interview with CNBC, the central banker said he and his colleagues should move slowly, but they should start to ease as they expect him to continue as inflation does not pose a major economic threat.
“I think we’re in a position to be able to do this as early as July,” Waller said in an interview with CNBC’s Steve Reesman on Scokebox. “It’s my opinion whether the committee will follow that.”
Comments come two days after the Federal Open Market Committee voted to stabilize key interest rates.
President Donald Trump, who appointed Waller as governor while in office, has denounced the Fed for lowering interest rates to reduce borrowing costs on $36 trillion in government bonds.
In his remarks, Waller said he believes the Fed should cut to avoid a potential slowdown in the labor market.
“If you’re beginning to worry about negative risks [to the] The labor market moves now, don’t wait. ” he said. So we say we should start thinking about reducing policy rates at our next meeting. Because we don’t want to wait until the job market tank before cutting policy rates. ”
Stock market futures profited after Waller’s remarks.
It is unclear whether Waller can reverse much of the support for his position.
The FOMC, including Waller, voted unanimously at this week’s meeting, locking the benchmark federal fund rate into a target range of 4.25%-4.5%.
According to a “dot plot” of individual officials’ expectations of interest rates this year, seven of the 19 meeting participants said they see stable this year, with two people only seeing one cut and the remaining 10 expecting two or three cuts. The diversification reflected a sense of uncertainty about policymakers about where interest rates were heading, but the central outlook pointed to a total of two cuts.
Trump is seeking dramatic moves, saying he believes the benchmark rate should be at least 2 percentage points lower, suggesting it is 2.5 points below the current level of 4.33%. In his remarks Wednesday before the Fed meeting, Trump called Fed Chairman Jerome Powell “silly” not cutting.
But Waller said he believes the committee should move slowly. Powell’s term as a chair expires in May 2026, with Waller being considered a potential job. Trump says he plans to quickly find out what he intends.
“You’ll want to start slowly and defeat it to make sure there’s no big surprise, but you’ll start the process, and that’s what matters,” Waller said. “We’ve been pausing for six months to wait and see, and so far the data hasn’t been OK… Even if the tariffs come later, even if the effects are still the same, it’s a one-off level effect and shouldn’t cause sustained inflation, so there’s no need to wait longer.”
Other officials are reluctant to cut, mainly as they wait for what long-term impact Trump’s tariffs will have on inflation as well as on labor markets and broader economic growth.
“We’ve been pausing for six months thinking there’s a big tariff shock in inflation. We haven’t seen it. We’re following the data,” Waller said. “I have been arguing for a year that central banks should look into this.”
Powell reiterated at his post-meeting press conference on Wednesday that he believes the Fed can remain in standby mode as the labor market continues to remain in place. Recent inflation data shows little pass-through as long as companies burn stocks accumulated in preparation for their tariff announcements. And amid concerns that consumer demand is reducing its pricing power.
Futures Market pricing shows that there is little chance of rate reductions at the July 29th-30 meeting, according to CME Group’s FedWatch measurements, with the next move expected to take place in September.
