Fed"s Waller supports interest rate cut at September meeting

Federal Reserve Governor Christopher Waller expressed support for an interest rate cut at the upcoming Federal Open Market Committee meeting scheduled for September 17-18. He emphasized that the time has come to adjust the federal funds rate, citing progress on inflation and a moderation in the labor market. Waller's remarks followed a disappointing nonfarm payrolls report, which indicated a slowdown in job growth, reinforcing the need for policy adjustments. He indicated that if the labor market deteriorates more rapidly than anticipated, the Fed should consider larger cuts to maintain economic stability. Waller's comments align with a growing sentiment among other policymakers advocating for easing monetary policy soon. He reiterated the importance of being open-minded regarding the size and pace of potential rate cuts, suggesting that a series of reductions may be necessary as inflation approaches the central bank's 2% target. The labor market's current state, along with inflation trends, will guide future decisions on rate adjustments. The futures market has reacted to the recent jobs report, indicating an increased likelihood of a quarter percentage point rate reduction this month, with expectations for more aggressive cuts later in the year. Predictions include a potential half-point move in November and possibly another in December, reflecting a shift in market sentiment towards a more accommodative monetary policy. Overall, Waller's statements highlight the Fed's readiness to respond to economic indicators and the evolving labor market, aiming to achieve a soft landing while supporting growth and employment.