While unclear what the whole central bank board will decide, Waller believes the Fed could act before September
Despite market expectations that the Federal Reserve would wait until at least September to consider any rate cuts, one Fed governor suggested this morning that the central bank could bring rates lower much earlier.
Federal Reserve governor Christopher Waller said Friday that a cut in interest rates could come as early as July. He said tariffs are unlikely to drive inflation high enough to delay such a move.
In an interview on CNBC, Waller emphasized the importance of beginning the process of lowering rates cautiously but without unnecessary delay, as inflation has continued to cool.
“I think we’re in the position that we could do this and as early as July,” Waller said. “That would be my view, whether the committee would go along with it or not.”
His remarks followed Wednesday’s Federal Open Market Committee (FOMC) meeting, which ended with the Fed leaving interest rates unchanged for the fourth consecutive time since the last adjustment in December.
Although nominated by former President Donald Trump, who has frequently pressed the Fed to slash rates in light of the ballooning national debt, Waller stressed his stance was based on labor market concerns.
“If you’re starting to worry about the downside risk [to the] labor market, move now, don’t wait,” he said. “Why do we want to wait until we actually see a crash before we start cutting rates? So, I’m all in favor of saying maybe we should start thinking about cutting the policy rate at the next meeting, because we don’t want to wait till the job market tanks before we start cutting the policy rate.”
Still uncertain what Fed will do
Despite his public comments, Waller joined in the unanimous vote this week to keep the federal funds rate within its current target range of 4.25% to 4.5%.
The Fed’s dot plot showed seven members forecasted no cuts in 2025, two predicted a single cut, and 10 projected two or three reductions. The median projection suggested two cuts in total.
Trump, meanwhile, has called for a far more aggressive approach, suggesting cuts of up to 2.5%. He lashed out at Fed chair Jerome Powell earlier this week, calling him “stupid” for not pushing rate cuts more aggressively.
President Trump renewed his attacks on Jerome Powell Thursday morning, describing the Federal Reserve chair as “truly one of the dumbest, and most destructive, people in Government” and saying the Fed’s funds rate should be far lower.https://t.co/PCqgIrac6f
— Mortgage Professional America Magazine (@MPAMagazineUS) June 19, 2025
Some national economists have agreed with Trump’s stance, believing that the Federal Reserve was lagging and needed as many as six cuts in the next 12 months to return rates to a normal level.
The need for a deliberate pace
Other economists see the rationale in the Fed’s careful opinion, as economic and geopolitical turmoil have introduced uncertainty into the market, causing the Federal Reserve’s wait-and-see approach.
Waller, however, reiterated the need for a careful and deliberate pace, even as he advocated beginning the rate-cutting cycle.
“You’d want to start slow and bring them down, just to make sure that there’s no big surprises. But start the process. That’s the key thing,” he said. “We’ve been on pause for six months to wait and see, and so far, the data has been fine. I don’t think we need to wait much longer, because even if the tariffs come in later, the impacts are still the same. It should be a one-off level effect and not cause persistent inflation.”
In his comments following Wednesday’s FOMC meeting, Powell said the Fed remains in observation mode, citing continued resilience in the labor market. Recent inflation data has suggested a minimal impact from tariffs thus far, as companies manage excess inventory and brace for potentially weaker consumer demand.
Market participants still largely expect the Fed to hold rates at its July 29-30 meeting, with a September cut the most likely outcome from betting markets.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
