Federal Reserve Governor Waller: If employment weakens, I will advocate for rate cuts again later this year

Federal Reserve Governor Christopher Waller stated on Friday that if signs of weakness appear in the job market, he will support interest rate cuts later this year, while remaining vigilant about inflationary pressures that may arise from the current geopolitical situation.

Waller pointed out that the closure of the Strait of Hormuz indicates greater inflationary pressures, and rising oil prices could ultimately affect core inflation. He emphasized that the current cautious stance does not mean that there will be no action for the remainder of the year.

His remarks provide an important signal to the market—that the window for interest rate cuts has not closed, but it is contingent on a clear weakening of employment data.

Doubts About Employment Data

Waller admitted that after the last employment report was released, he initially thought he would hold a dissenting opinion. He stated, "Rationally, I understand the logic of how employment data operates, but intuitively, I cannot assert that everything is normal in the job market."

On the same day, Federal Reserve Vice Chair for Supervision Michelle Bowman indicated that due to concerns about a weak labor market, she expects three interest rate cuts this year.

"I still have concerns about the job market," Bowman said in an interview with Fox Business. "To support the labor market, I support three interest rate cuts by the end of 2026," she stated. At this week's Federal Reserve policy meeting, FOMC members unanimously decided to cut rates only once this year.

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