50 bps cut was the right move

Federal Reserve (Fed) Board of Governors member Christopher Waller noted on Friday that while the Fed’s decision to cut interest rates by an accelerated 50 bps, the Fed’s data-dependent approach could mean that the next meeting will be a pause as policymakers await further data.

Key highlights

(50 bps rate cut) whas the right call.

We are at the point that the economy is strong, we want to keep it that way, 50 bps right policy action to do that.

In terms of 25 bps vs 50 bps, my speech two weeks ago said 25 bps was a good idea but open to 50. The inflation data during the blackout pushed me to a 50 bps cut.

CPI report and PPI report flowing into PCE inflation was my consideration.

Inflation is softening much faster than I thought it was going to.

If data comes in fine, you could imagine going 25 next meeting or two.

If labor market worsens and inflation data softens quicker, we could do more.

We could even pause, depending on the data.

We see a lot of room to move down in next 6-12 months.

Inflation is potentially on a lower path than we were expecting.

I am a bit more concerned about inflation running softer.