Federal Reserve Governor Christopher Waller is urging a 25 basis point interest rate cut by the end of July, citing growing economic risks and minimal inflationary pressure from President Trump’s trade tariffs. Speaking at a Money Marketeers event in New York, Waller emphasized the need for monetary policy to shift from restrictive to neutral territory as signs of strain appear in the U.S. labor market.
Waller noted that both hard and soft economic data point to a slowing economy, supporting the case for rate cuts. “The economy is still growing, but its momentum has slowed significantly,” he said, adding that the Fed’s employment mandate now faces greater risks. Waller’s call comes just ahead of the central bank’s two-week media blackout before its next policy meeting.
In contrast to Fed Chair Jerome Powell’s cautious stance, Waller downplayed the inflationary impact of Trump’s recent tariffs, calling them a one-time price-level shock. “Central bankers should look through temporary price increases caused by tariffs to avoid unnecessary tightening,” he said.
Powell has held off on committing to rate cuts, stating the Fed will wait to see the full inflationary effect of tariffs before making a move. Meanwhile, President Donald Trump has repeatedly pressured Powell to lower rates and has even launched personal attacks against the Fed Chair. Recent speculation over Trump potentially firing Powell has intensified, though Trump has denied such intentions.
Waller remains one of the few dovish voices within the Fed, pushing for proactive easing despite most officials urging caution. His remarks highlight the growing divide within the central bank over how to respond to a slowing economy, persistent tariff uncertainty, and political pressure from the White House.