Fed's Waller Signals More Rate Cuts, Urges 'Cautious' Approach
Governor's comments reinforce dovish pivot, but suggest the pace of monetary easing will remain heavily data-dependent.
Federal Reserve Governor Christopher Waller on Friday reaffirmed the central bank's trajectory towards further interest rate reductions but stressed the need for a deliberate and careful approach. In comments that reinforced the market's expectation of a dovish policy shift, Waller stated the Fed needs to be '', suggesting that the timing and magnitude of future cuts will be dictated by incoming economic data.
Waller's stance is underpinned by his assessment that inflation is approaching the central bank's 2% target and his growing concerns over a weakening labor market. The influential governor has previously warned that private-sector payroll growth is nearing a 'stall speed' and that labor markets can deteriorate rapidly, arguing for proactive policy action to preempt a significant downturn. , he has consistently pointed to these dual factors as the primary rationale for easing monetary policy throughout 2025.
The governor’s commentary injects a note of moderation into market expectations, tempering bets on a rapid series of cuts. While Waller has been a vocal advocate for easing—at times dissenting with his colleagues in favor of cuts—his emphasis on caution signals that the Federal Open Market Committee (FOMC) will likely avoid a pre-set course. This data-dependent strategy means that key reports on inflation and employment will be scrutinized heavily by investors for clues on the timing of the next move. largely align with this view, predicting a sequence of cuts contingent on continued economic softening.