Fed's Christopher Waller argues for lower interest rates
Waller's remarks support the Trump administration's argument that tariffs may raise some prices temporarily, but do not represent permanent inflation.
Federal Reserve Building
Federal Reserve (Fed) Governor Christopher Waller made a forceful call for a rate cut in July, arguing that any inflation from tariffs would be temporary.
"It makes sense to cut the FOMC’s [Federal Open Market Committee’s] policy rate by 25 basis points two weeks from now," Waller said Thursday night, referring to the central bank's monetary policy meeting in late July.
The Fed governor added that additional cuts later this year could be appropriate if "subsequent employment and inflation data point toward fewer cuts."
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According to Waller, the current monetary policy stance is likely to be "restrictive," with real interest rates estimated at 125 to 150 basis points above neutral. "This degree of policy tightening was appropriate in 2022 and 2023," he said. "But, in my view, it is no longer warranted."
The Fed governor's remarks support the Trump administration argument that tariffs may raise some prices temporarily, but do not represent permanent inflation.
Although Fed Chairman Jerome Powell has insisted on the inflationary risks from tariffs, Waller's statements suggest growing domestic support at the Fed for lower interest rates.
Trump says Jerome Powell is "stupid" and "political"
"He's a political guy and not a smart person," the president said.
Trump said the economy is doing very well despite the Fed's high interest rates, but would be doing even better if Powell lowered them.
"So we have no inflation, we have only success, and I'd like to see interest rates get down," he added.
Also, the president said the central bank should cut its benchmark rate by 2.5 percentage points.
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