Fed’s Waller backs Sept rate cut, flags labor market risks

Federal Reserve Governor Christopher Waller said on Thursday he supports a quarter-point interest rate cut at the U.S. central bank’s September meeting, citing weakening job growth and contained inflation once tariff effects are stripped out.

Speaking at the Economic Club of Miami, Waller argued the Fed should not wait for a sharper deterioration in the labor market before easing policy. “I believe this argument is even stronger today,” he said, adding that recent payroll revisions show job creation may have actually contracted in the past three months.

Waller said private-sector hiring has slowed to “stall speed,” while wage growth for job switchers has fallen below that for stayers, a reversal of normal patterns in a strong labor market. He warned risks are mounting that conditions could worsen “quite rapidly.”

Inflation, he noted, is running near the Fed’s 2% goal once tariff-driven price increases are excluded. “Proper risk management means the FOMC should be cutting the policy rate now,” Waller said.

While backing a 25-basis-point move in September, Waller said he anticipates further easing over the next three to six months, with the pace guided by incoming data.

“While I judge that the FOMC should have begun this process in July, based on the data in hand, I don’t believe that a cut of larger than 25 basis points is needed in September,” Waller added.