US Federal Reserve Governor Christopher Waller has indicated his support for a further reduction in the federal funds rate. In prepared remarks for a speech titled “The case for continuing rate cuts”, Waller stated he would advocate for a 0.25 percentage point cut when policymakers convene on December 9 and 10. His stance reflects concerns about the current state of the labour market and the broader economic impact on lower- and middle-income consumers.
Waller’s decision is influenced by underlying inflation levels, which he believes are near the Federal Open Market Committee’s target. Despite upcoming jobs reports, Waller anticipates that incoming data will not alter his view on the necessity of a rate cut. He voiced apprehension that current monetary policy may be overly restrictive, thus creating economic hardship for certain segments of the population.
“With underlying inflation close to the [federal open market committee]’s target and evidence of a weak labour market, I support cutting the committee’s policy rate by another 25 basis points at our December meeting,” Waller said. He also stated, “For reasons I have explained, I am not worried about inflation accelerating or inflation expectations rising significantly. My focus is on the labour market, and after months of weakening, it is unlikely that the September jobs report later this week or any other data in the next few weeks would change my view that another cut is in order.”
Waller concluded by emphasising the need for a more neutral policy setting to mitigate the risk of further labour market deterioration. “I worry that restrictive monetary policy is weighing on the economy, especially about how it is affecting lower-and middle-income consumers. A December cut will provide additional insurance against an acceleration in the weakening of the labour market and move policy toward a more neutral setting.”
