Federal Reserve Governor Christopher Waller signaled June 20 that the Fed might begin lowering interest rates “as early as July,” citing muted inflation pressures from tariffs and signs of a cooling labor market—marking a shift from the central bank’s wait-and-see stance.
At a Glance
- Governor Waller said the Fed could “move now, don’t wait” via a July cut, despite others preferring a more cautious approach
- The Federal Open Market Committee just held rates steady at 4.25–4.50%—its fourth pause in a row
- Futures markets currently price a strong chance of cuts starting in September, not July
- Waller and Trump have clashed on timing, though Powell remains neutral and data-driven
- A rate cut now could buffer jobs if the labor market slows—but risks rekindling inflation concerns
Waller Pushes for Early Move
In an interview with NBC News, Waller argued that with tariffs unlikely to amplify inflation, the Fed should not wait until signs of labor-market deterioration appear. “If you’re starting to worry about the downside risk [to the] labor market, move now, don’t wait,” he said.
Fed Still Bound by Committee Caution
Despite Waller’s view, most Federal Open Market Committee members expect a more gradual approach. The latest “dot plot” indicates seven officials expect no rate cuts this year, two anticipate one, and ten anticipate two to three cuts. The central bank maintained its target range at 4.25–4.50%, the same level since December, according to Reuters.
Watch a report: Powell outlines Fed stance after rate hold
Market & Political Stakes
Market futures currently lean toward a September rate cut—reflecting uncertainty over Waller’s July outlook. President Trump, who appointed Waller, has repeatedly called for aggressive rate cuts, putting pressure on the Fed. But Chair Powell has echoed Waller’s slow-but-ready tone, emphasizing reliance on incoming economic data, as reported by CNBC.
What’s at Risk?
A July rate cut could cushion any downturn in jobs or growth—but carries the risk of reigniting inflation if the economy rebounds. Waller pointed to the data on inflation and labor markets as justification for early action. The question now is whether the Fed will follow his lead—or hold its nerve and wait for clearer signals before adjusting policy.
Governor Waller’s call opens the door to potential early rate easing—but the Fed remains divided. Investors and businesses will be watching the July meeting closely as the central bank balances its growth and inflation mandate.
