Waller Reiterates Support for Fed Rate Cuts but Urges Caution

Fed Governor Chris Waller has again expressed support for additional Fed rate cuts. However, he called for caution on the magnitude of the cuts due to mixed economic signals regarding inflation and the labor market. Meanwhile, the crypto market is currently pricing in an additional 25 basis points (bps) rate cuts at both the October and December FOMC meetings.

Chris Waller Backs More Fed Rate Cuts

The Fed Governor said during a CNBC interview that he still believes that they need to cut rates, but that they need to be cautious about it. He further remarked that he was fine with the pace at which they were moving, but doesn’t think they should move any faster.

Notably, Waller had been one of the Fed officials who actively advocated for Fed rate cuts even before the FOMC made the first rate cut at the September meeting. He and Fed Governor Michelle Bowman were the only ones who dissented in favor of a 25 basis points (bps) cut at the July FOMC meeting.

With the Fed now looking to be on a path of monetary easing, the magnitude of the cuts is now in focus. Fed Governor Stephen Miran has called for a series of 50 bps cuts and dissented in favor of one at the September FOMC meeting. However, Waller is more comfortable with an additional 25 bps Fed rate cuts at the October and December meetings.

The Need For Caution

The Fed Governor noted that on the one hand, the U.S. labor market is weakening, indicating a slowdown in the economy. On the other hand, the GDP is strong, and concerns over inflation risks persist, as inflation remains well above their 2% target.

Therefore, he wants them to move at a pace that allows them to easily pivot if necessary. “I want to move towards cutting rates, but you’re not going to do it aggressively and fast, in case you make a big mistake on which way that things go,” Waller said.

Meanwhile, the Fed Governor is the latest Fed official to back more Fed rate cuts this year. As CoinGape reported, Fed Presidents John Williams and Mary Daly have already shown their support for additional rate cuts amid concerns about the labor market.

Fed Governors Michelle Bowman and Stephen Miran also indicated that they will support more cuts. However, officials like Fed Governor Michael Barr are leaning towards the inflation risks and are more cautious about adjusting monetary policy.