Fed Governor Waller: "Interest Rate Cuts Expected Over the Next 3 to 6 Months"

"The Pace of Cuts Will Be Determined by Economic Data"
Waller Supports 25bp Rate Cut in September

Christopher Waller, a member of the Federal Reserve Board appointed by U.S. President Donald Trump, predicted that interest rate cuts would continue over the next three to six months.

Christopher Waller, Member of the Board of Governors of the Federal Reserve System (Fed). Photo by Reuters Yonhap News

On August 28 (local time), during a speech at the Economic Club of Miami, Waller stated that he would support a 25 basis point (1bp = 0.01 percentage point) rate cut at next month's Federal Open Market Committee (FOMC) meeting, which will determine the benchmark interest rate, in order to prevent a collapse of the labor market. He also said, "I expect additional rate cuts over the next three to six months," adding, "The pace of rate cuts will be determined by incoming data."

Waller noted, "Based on the data currently available, I do not believe a rate cut larger than 0.25% will be necessary next month." However, he added, "If this month’s employment report indicates that the economy is significantly weakening and inflation is being well contained, my view could change," suggesting that he might support a 'big cut' of 0.5 percentage points.

Additionally, Waller stated, "It is time to ease monetary policy and move rates to a more neutral position," defining the neutral rate as 1.25 to 1.50 percentage points lower than the current policy rate of 4.25 to 4.50%, based on estimates from Fed officials.

Waller and Vice Chair Michelle Bowman, both appointed by President Trump, argued for a rate cut at last month's FOMC meeting, citing a slowdown in the labor market, even though the committee decided to keep rates unchanged. Both are being mentioned as potential successors to Federal Reserve Chair Jerome Powell, whose term ends in May 2026.

Chair Powell, who had kept rates unchanged this year on the grounds that tariff policies could drive up prices, suggested openness to rate cuts in his speech at the Jackson Hole meeting on August 22.