Federal Reserve Governor Christopher Waller, on Monday that expressed his strong opinions in favor of another interest rate cut at the central bank meeting in December, claiming that he has become concerned with the labor market and the rapid decline in job creation.
With an ever-divided Fed, Waller found himself squarely on the side of those who wanted to relax monetary policy to prevent a greater threat to the job creation.
However, other opponents, such as several regional presidents, have indicated in recent days that they oppose further cuts because they consider inflation as a lingering economic menace that would be sparked once again by further easing.
In prepared remarks delivered to a group of economists in London, Waller said that “I am not worried about inflation accelerating or inflation expectations rising significantly. My focus is on the labor market, and after months of weakening, it is unlikely that the September jobs report later this week or any other data in the next few weeks would change my view that another cut is in order.”
The Federal Open Market Committee, which sets the rate next, sits from December 9 to 10. Markets are split on the direction that the panel will turn after successive quarter percentage point or 25 basis point cuts at the September and October meetings.
Vice Chair Philip Jefferson, earlier on Monday, was uncertain about the upcoming meeting, stating that the current economic climate requires policymakers to “proceed slowly” as they consider further reductions.
Boston Fed President Susan M. Collins indicated on Wednesday that she believes that there is a “high bar” for more easing.
Waller stated that he prefers another quarter-point adjustment, and Governor Stephen Miran is an appointee of President Donald Trump, preferred half-point actions in the previous two meetings.
Although he has made several speeches in recent months in support of cuts, Waller revised his remarks to include the current development.
In the absence of government information in the just-concluding shutdown, the policymaker used a range of other evidence of poor demand in the work environment and strain on customers.
Simultaneously, he added that price statistics have shown tariffs will not affect inflation in the long-term buildup. Reduction again will be a matter of “risk management,” which Chair Jerome Powell has also been applying.
Waller further added that “I worry that restrictive monetary policy is weighing on the economy, especially about how it is affecting lower-and middle-income consumers. A December cut will provide additional insurance against an acceleration in the weakening of the labor market and move policy toward a more neutral setting.”
Waller dismissed the allegation that the Fed has been “flying blind” in terms of policy, as the shutdown halted practically all official government economic information.
He also stated that “Despite the government shutdown, we have a wealth of private and some public-sector data that provide an imperfect but perfectly actionable picture of the U.S. economy.”
