Federal Reserve Governor Christopher Waller has expressed support for a potential interest rate cut at the upcoming Federal Open Market Committee (FOMC) meeting, scheduled for September 17-18, CNBC reports.
In prepared remarks delivered at the Council on Foreign Relations in New York, Waller emphasized the need to address a softening labor market while inflation continues to moderate.
“Considering the achieved and continuing progress on inflation and moderation in the labor market, I believe the time has come to lower the target range for the federal funds rate at our upcoming meeting,” Waller stated.
His comments align closely with Fed Chair Jerome Powell’s recent signals that adjustments to monetary policy may soon be warranted.
Waller’s remarks come on the heels of a weaker-than-expected jobs report from the Labor Department, which showed the US economy added 142,000 jobs in August, below the forecasted 161,000. This added to the belief that the pace of hiring is slowing, providing additional impetus for policymakers to consider easing monetary policy.
While Waller did not specify the magnitude or frequency of potential rate cuts, he indicated that further reductions could follow if the labor market continues to weaken. He suggested that if employment trends deteriorate more rapidly than anticipated, the Fed may need to implement more substantial cuts to prevent a downturn and support a “soft landing” for the economy.
Waller also hinted that the upcoming cut might not be a one-off move.
“I do not expect this first cut to be the last,” stated Waller.
He added that a series of reductions could be necessary to maintain economic stability.
Market expectations have shifted in response to Waller’s comments, with futures traders increasingly pricing in a quarter-point rate cut in September. The likelihood of further reductions, including a potential half-point cut in November and another in December, has also grown, according to the CME Group’s FedWatch tool.
