On Monday Federal Reserve Governor Christopher Waller expressed his support for a further cut in key interest rates at the Monetary Policy Committee meeting scheduled for December 9 and 10. He believes that the continuing deterioration in the job market and weak demand justify further easing. He called for a quarter-point cut, arguing that current interest rates are too restrictive and are weighing particularly heavily on low-income households.
This position comes at a time when the consensus within the Fed remains divided. Several regional bank presidents oppose any further cuts, arguing that there is a risk of inflation resurgence. Waller, meanwhile, dismissed this fear, arguing that inflation expectations are well anchored and that the impact of tariffs on prices should remain limited and temporary. He advocates a "risk management" approach, aimed at limiting the effect of a sharper-than-expected slowdown on the economy.
The governor also said that analysis of alternative data—in the absence of government statistics during the 43-day shutdown—confirms a sharp weakening in employment momentum. He considers it unlikely that the next monthly employment report, expected this week, will change the diagnosis. By insisting on the need to bring monetary policy closer to a more neutral level, Waller joins other Fed officials, such as Stephen Miran, who advocate faster easing to avoid excessive tightening of economic conditions.
