Federal Reserve Governor Waller: I am concerned about the labor market and advocate for a rate cut in December
Waller pointed out that the latest data shows the labor market remains weak, but he also mentioned that the delayed economic reports to be released intensively after the December meeting may make the January decision "more challenging."
Federal Reserve Governor and a leading candidate for the next Fed Chair, Christopher Waller, stated that he advocates for a rate cut in December, but once a large amount of economic data is received in January, the Fed may adopt a "meeting-by-meeting" decision-making approach.
On Monday local time, Waller expressed on Fox Business Channel: "My main concern is the labor market, which relates to our dual mandate. Therefore, I advocate for a rate cut at the next meeting. By January, you may see more decisions made on a meeting-by-meeting basis." "The impact of tariff inflation is not that significant and will be one-off."
Futures contracts indicate that investors believe there is about a 70% probability that the Fed will cut rates at its policy meeting scheduled for December 9-10. After two rate cuts in September and October, there seems to be a significant divide among Fed officials on whether to cut rates again.
Waller pointed out that the latest data shows the labor market remains weak, but he also mentioned that the delayed economic reports set to be released after the December meeting could make the January decision "more complicated." Non-farm payroll data for October and November will be released on December 16, and the November Consumer Price Index (CPI) data is scheduled for December 18.
"If the data shows inflation or employment suddenly rebounding, or the economy taking off, that could raise concerns," he said. "I still believe the labor market will not improve significantly in the next six to eight weeks." "The concentration of job growth in two areas is not a good sign."
Waller is currently listed by the Trump administration as one of the candidates to succeed Jerome Powell as Fed Chair next year. He mentioned that he had a "pleasant meeting" about ten days ago with U.S. Treasury Secretary Scott Basset, who is overseeing the interview process.
"We had a speculative conversation, discussing economics, the economy, and financial markets," Waller said. "They never talked politics, only economics, which was a very enjoyable exchange for me."
