Fed's Waller says the time has come to move US interest rates lower

Fed's Waller says the time has come to move US interest rates lower

• Waller's views are coloured by his desire to curry favour with Trump and be appointed next Fed Chair

Federal Reserve Governor Waller

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• The time has come to move policy to a more neutral stance

• Would support 25 bps cut at Fed’s September meeting

• Waller says he anticipates additional rate cuts over next 3–6 months

• Don’t believe a bigger September cut is needed, unless August jobs report shows substantial weakening and inflation stays well-contained

• Wanted rate cut in July, feels more strongly about it now

• Waller says policy rate is ‘moderately restrictive,’ estimated at 1.25 to 1.50 percentage points above neutral

• Underlying inflation, factoring out temporary effect of tariffs, is close to 2%

• Labor demand is weakening, and that is not good

• Downside risks to labor market have increased