Federal Reserve Governor Christopher Waller, one of President Trump’s potential picks to chair the central bank, said Thursday the Fed must begin cutting interest rates at its next meeting.
In an interview with CNBC’s “Squawk Box,” Waller expressed concerns about how quickly the weakening U.S. job market could fall apart if the Fed doesn’t cut rates at its upcoming September policy meeting.
Waller also said he was less concerned than “everyone else” about the threat of tariff-driven inflation, even as price growth shows signs of heating up.
“When the labor market turns bad, it turns bad fast. … So for me, I think we need to start cutting rates at the next meeting,” Waller said.
“We don’t have to go into a lock sequence of steps. We can kind of see where things are going, because people are still worried about tariff inflation. I’m not, but everybody else is.”
Waller, whom Trump appointed to the Fed during his first term, is among roughly a dozen potential candidates to success Fed Chair Jerome Powell. Trump has raged against Powell for most of his chairmanship, and is eager to replace him with a candidate more willing to heed his views on the economy.
Waller won points with Trump and his top advisers by expressing far less concern about the potential inflationary impact of tariffs. While Powell and other economists say they are still on guard for longer-term inflation spirals, Waller has said for months that Trump’s tariffs will likely only cause a one-time increase in prices.
“I would say over the next three or six months, we could see multiple cuts coming in. Whether it’s like every other meeting, every meeting, we’ll have to wait and see [what] the data says,” Waller said.
Waller also drew attention in July when he and Fed Vice Chair of Supervision Michelle Bowman, another Trump addition to the Fed, both voted to cut interest rates, bucking other Fed colleagues. Their dissent marked the first time in more than 30 years that two Fed boardmembers voted against the majority.
While Waller’s track record on interest rates and tariffs may be more appealing to Trump than Powell’s, his refusal to break from his Fed chief earlier could harm his standing with the president.
Waller also acknowledged Wednesday that tariffs are a tax — an economic reality disputed by Trump and many of his advisers — that could slow growth.
The next meeting of the Federal Open Market Committee (FOMC), the panel of Fed officials responsible for setting interest rates, is scheduled for Sept. 16-17.
In remarks earlier this month, Powell suggested the Fed could start cutting rates as soon as September after a ream of economic data showed the job market weakening. Financial markets see more than a 95 percent chance of the Fed cutting rates by 0.25 percentage points, according to the CME Group FedWatch tool.
Despite the near certainty of a small rate cut, there is considerable uncertainty hanging over the next FOMC meeting.
Trump shook the financial world last week when he moved to fire Fed Governor Lisa Cook, who has challenged the president’s move in federal court. Cook is attempting to prove that allegations of mortgage fraud levied by a close Trump ally is not sufficient “cause” under the Federal Reserve Act to dismiss her.
Trump is also attempting to secure the confirmation of top White House economist Stephen Miran to the Fed board ahead of the upcoming FOMC meeting. Miran will face members of the Senate Banking Committee for a Thursday confirmation hearing, and is expected to be easily approved for the position by the GOP-controlled upper chamber.
