- Fed Governor Christopher Waller says they should start cutting interest rates in the coming FOMC meeting this month.
- He believes the current figures exceed the ideal levels by 1.0% to 1.5%.
- Waller is one of the candidates to succeed Powell next year.
Federal Reserve Governor Christopher Waller reiterated his position that they should start cutting interest rates as early as the next Federal Open Market Committee (FOMC) meeting. This is a follow-up on his statement before the weekend, saying that he sees rate cuts over the next three to six months.
Interest Rates are Over the Neutral Level
In his latest interview with CNBC on Wednesday, Waller highlighted that the Fed does not need to go in “lock-sequence of rate cuts.” Instead, they can “adjust the pace” depending on market conditions.
Additionally, the Fed governor said that despite his colleagues and some members of the public getting worried about the repercussions of tariffs on inflation, he knows “where things are going.” Hence, he is confident that the time is ripe for the US central bank to pull the trigger on the rate cuts.
Waller explained that the US may experience “a blip of inflation” in the next few months, but the numbers will stabilize near 2% in six months. He believes the current rates are 1.0% to 1.5% above the “neutral” level.
The next FOMC meeting is slated for September 16 to 17. Meanwhile, interest rates have been pegged at 4.25% to 4.5% for five consecutive sessions.
Waller to Succeed Powell as Fed Chair
The Fed governor has been at the center of the spotlight following reports that he is one of the people President Donald Trump favors to succeed Jerome Powell upon his retirement as Fed chair next year. The president’s advisers notably pitched for him due to his support for the administration’s tariffs, as he dissented with the Fed’s consensus that it has a long-term effect on inflation. His chances increased after Trump ruled out Treasury Secretary Scott Bessent as Powell’s successor.
Notwithstanding these developments, Waller emphasized that the Fed must maintain its independence regardless of who is at the helm in the White House. He also declined to comment on the controversy hounding his colleague, Fed Governor Lisa Cook, who is currently in Trump’s crosshairs for her alleged commission of a mortgage fraud.
Waller said the public expects them to always act apolitically, no matter who is the appointing authority.
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