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Rate cuts could materialize earlier than consensus expectations, according to Federal Reserve Governor Christopher Waller.
In a new interview with CNBC, Waller says the Federal Open Market Committee (FOMC) could slash the federal funds rate as soon as July.
“Any tariff inflation we should see, and I’ve been given various estimates, and I don’t think it’s going to be that big, and we should just look through it in terms of setting policy and look at the underlying trend of inflation. And right now, the data the last few months is showing that trend inflation is looking pretty good, even on a 12-month basis, so I’ve labeled these ‘good news rate cuts,’ if inflation comes down to target, we can actually bring rates down.
I’ve been saying this since around November of ’23. So I think we’re in that position that we could do this as early as July.”
Waller does say that’s just his view and acknowledges the FOMC might not share that opinion.
The FOMC announced on Wednesday that it planned to maintain the target range for the federal funds rate at 4.25-4.5%, arguing that it was the most suitable level to achieve both maximum employment and controlled inflation. The Fed has held interest rates steady since December, when it cut the rate by 0.25%.
CME Fed Watch tool indicates there’s only a 14.5% chance of a rate cut in July but a 61.8% chance of one at the FOMC’s meeting in September.
