Fed Governor Waller Sees Path to Interest Rate Cuts Later This Year

Federal Reserve Governor Christopher Waller has expressed optimism about the possibility of interest rate cuts later this year, despite the temporary inflationary pressures from tariffs imposed during the Trump administration. Waller believes the inflation caused by tariffs will be short-lived and that inflation expectations remain well anchored, supporting a 'look through' approach to these price increases when setting monetary policy. He noted that the strong labor market and progress on inflation provide the Fed with time to assess how trade developments unfold before making decisions on interest rates. While tariffs are expected to boost unemployment and raise inflation temporarily, Waller maintains that this impact may peak in the second half of 2025 and should not prevent the Fed from considering rate reductions if the economy remains healthy. His stance contrasts with more cautious views among other Fed officials who are adopting a wait-and-see attitude. Overall, Waller's comments suggest that if inflation continues to ease and tariffs moderate, the Fed could implement 'good news' rate cuts later in 2025.