Fed’s Waller Urges Fed to ‘Get on With’ September Rate Cuts

Governor Christopher Waller’s speech laid out his argument that inflation is effectively back at target while the labor market is weaker than headline numbers suggest. (Al Drago/Bloomberg)

Federal Reserve Governor Christopher Waller said Thursday the central bank should begin cutting interest rates next month and keep going in the months ahead, making his most forceful case yet for an easing cycle.

“Based on what I know today, I would support a [quarter percentage point] cut at the Committee’s meeting on Sept. 16 and 17,” Waller said in prepared remarks at the Economic Club of Miami. “As I stand here today, I expect additional cuts over the next three to six months.”

The speech, titled “Let’s Get On With It,” laid out Waller’s argument that inflation is effectively back at target while the labor market is weaker than headline numbers suggest.

“In July, I argued that, looking through tariff effects, with underlying inflation near target and the upside risks to inflation limited, the Federal Open Market Committee (FOMC) should not wait until the labor market deteriorates before we cut the policy rate,” he said. “Based on all the data in hand, I believe this argument is even stronger today, and that the downside risks to the labor market have increased.”

Waller was one of two who dissented—along with Governor Michelle Bowman—when the Fed voted to hold rates steady in July. Fed Chair Jerome Powell opened the door to rate cuts in September at his Jackson Hole speech but avoided laying out a path beyond that.

Waller pointed to payroll revisions showing job growth has nearly stalled. He dismissed the idea that falling immigration or other supply constraints explain that weakness.

“Supply-side changes can’t account for the ugly jobs numbers of the past three months,” he said.

The governor also stressed the Fed could be allowing itself to fall behind the curve if it keeps interest rates where they are.

“I don’t believe that policy has fallen substantially behind the curve, but one way to signal that I don’t intend to allow that to happen is to talk about where we go after September,” he said.

Waller also stressed that his outlook depends on how the data evolve.

His comments come amid heightened political pressure on the central bank. Waller was appointed to the Federal Reserve Board by President Donald Trump in 2020 and has been floated as a possible successor to Powell when his term as chair ends next May. Since 2022, Waller has also overseen the Fed’s process for selecting regional bank presidents.

Trump has been pushing Fed officials to cut rates quickly and earlier this week said on social media that he had fired Governor Lisa Cook. On Tuesday he said during a cabinet meeting that “we’ll have a majority [on the Fed board of governors] very shortly.”

Write to Nicole Goodkind at nicole.goodkind@barrons.com.