Fed Governor Waller Backs July Rate Cut Amid Slowing U.S. Economy

Federal Reserve Governor Christopher Waller has consistently advocated for a 25 basis point interest rate cut at the Federal Open Market Committee's July meeting, citing slowing economic growth, labor market fragility, and minimal underlying inflation despite President Donald Trump's tariffs. Waller argues that tariffs have caused only a temporary surge in prices and that monetary policy should focus on underlying inflation, which is nearing the Fed’s 2% target, rather than transient tariff-induced inflation. He highlights that the economy's momentum has slowed significantly with private payroll employment near stall speed and real GDP growth likely around 1% for the first half of 2025. Waller's stance contrasts with Fed Chair Jerome Powell's more cautious approach, as Powell prefers to wait for clearer data on tariff impacts before cutting rates. President Trump has pressured Powell to lower rates and has criticized him publicly, though he recently stated firing Powell is unlikely. Waller’s position underscores a growing divide within the Fed on responding to economic slowdowns amid tariff uncertainty and political pressures.