Politics
Fed Governor Breaks With Powell, Backs Trump On Interest Rates And Inflation
Christopher Waller, Governor of the Federal Reserve, revealed some good news on Friday that should assuage economic fears concerning tariffs and inflation.
During an interview with CNBC, Waller said that he, along with his colleagues, should begin the process of making cuts slowly, but then start to ease since inflation is no longer posing a major economic threat to the country. The central banker also said he expects that to continue.
“I think we’re in the position that we could do this as early as July,” Waller remarked during a “Squawk Box” interview with host Steve Liesman. “That would be my view, whether the committee would go along with it or not.”
According to CNBC, Waller’s comments come several days after the Federal Open Market Committee (FOMC) held a vote and decided to keep its key interest rate where it is currently. This marks the fourth straight hold since the last cut was made in December 2024.
Waller, who was nominated for the position of governor during President Donald Trump’s first term, has been persistently badgering the Fed to reduce interest rates in order to reduce borrowing costs on the $36 trillion national debt.
In the interview, Waller stated the Feds need to make the cut in order to prevent a possible slowdown from happening in the labor market.
“If you’re starting to worry about the downside risk [to the] labor market, move now, don’t wait,” he went on to tell Liesman. “Why do we want to wait until we actually see a crash before we start cutting rates? So I’m all in favor of saying maybe we should start thinking about cutting the policy rate at the next meeting, because we don’t want to wait till the job market tanks before we start cutting the policy rate.”
Waller’s statements during the appearance on “Squawk Box” led to stock market futures experiencing a bump. As of this writing, it’s not clear if Waller will be able to garner majority support for his position.
The central banker also said that the FOMC voted unanimously to hold during this week’s meeting. The benchmark federal funds rate is thus locked in at a range of 4.25 percent to 4.5 percent.
“According to the ‘dot plot’ of individual officials’ expectations for interest rates this year, seven of the 19 meeting participants said they see rates holding steady this year, two saw just one cut likely, while the remaining 10 expect two or three reductions. The dispersion reflected a sense of uncertainty around policymakers about where rates should head, though the median outlook pointed to a total of two cuts,” CNBC reported.
President Trump wants to see major moves made, believing that the benchmark rate should be two percentage points lower than where it is. He also slammed Federal Reserve Chairman Jerome Powell as “stupid” for not being more aggressive in making cuts.
Waller sees things a bit differently, believing the committee needs to move slowly and steadily. Powell’s term ends next May, and many experts believe the leading candidate to be his replacement is Waller.
“You’d want to start slow and bring them down, just to make sure that there’s no big surprises. But start the process. That’s the key thing,” Waller explained. “We’ve been on pause for six months to wait and see, and so far, the data has been fine. … I don’t think we need to wait much longer, because even if the tariffs come in later, the impacts are still the same. It should be a one-off level effect and not cause persistent inflation.”