Fed’s Waller says the FOMC should cut interest rates by 25bp at the July meeting

Federal Reserve Governor Christopher Waller speech

Full text is here:

• My purpose this evening is to explain why I believe that the Federal Open Market Committee (FOMC) should reduce our policy rate by 25 basis points at our next meeting

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• The Fed should cut interest rates 25 basis points at July meeting

• Rising risks to economy favour easing policy rate

• If underlying inflation remains in check and growth tepid, more cuts needed

• The Fed should not wait until labour market hits trouble before cutting rates

• Delaying cuts runs risk of need for more aggressive action later

• Evidence mounting that labour market is growing weaker

• Tariffs likely to have one-time impact the Fed can look through

• July rate cut could give the Fed space to hold rates for a few meetings

• Absent tariff impact, inflation is close to the Fed’s 2% target

• Tariffs will boost inflation in the near term

• Risks include an economic slowdown with GDP around 1%

• Economy calls for monetary policy closer to neutral setting

• Expects tariff impact to fade next year

• Data suggests job market ‘on the edge’

• Upside risks to inflation are limited

• Sustained 10% tariff likely to increase inflation 0.75%–1% this year

• Private sector hiring ‘near stall speed’

This article was written by Eamonn Sheridan at www.forexlive.com.