US Fed Governor Waller: Inflation No Longer a Major Threat, Expresses Clear Support for July Interest Rate Cut

Fed Governor Waller said on Friday that he did not expect tariffs to significantly push up inflation, so policymakers should consider cutting interest rates as early as July.

Waller seemed somewhat dismissive of inflation, which Fed officials regard as a major enemy. He pointed out that inflation was no longer a major economic threat, and that Fed officials needed to be cautious but could start considering further interest rate cuts.

"I think we are in a position to act, possibly as early as July. That's my personal view, and whether the rest of the committee agrees is another matter," he said.

This week, the US Fed continued to maintain its policy interest rate within the range of 4.25% to 4.5%, while opening the door to interest rate cuts in the second half of the year (H2), but also hinted that it was not in a hurry to cut rates.

The dot plot showed that among the 19 participants, 10 expected the Fed to cut interest rates at least twice this year, still a majority but fewer than in March, while 2 expected one cut.

Trump again lashed out at Fed Chairman Powell, urging the Fed to cut interest rates by 250 basis points. "Mr. Too Late Powell has cost our country hundreds of billions of dollars. He is truly one of the dumbest and most destructive people in the government, and the Fed board is complicit. Europe has cut rates 10 times, and we haven't."

In his speech, Waller said he believed the Fed should cut interest rates to avoid a slowdown in the labour market."If you start to worry about the downside risks to the labour market, don't wait now. Why should we wait until we actually see the economy collapse before starting to cut interest rates?"

Waller said the current job market was still stable, but there were some signs emerging, such as higher unemployment rates among recent graduates.

He added that he fully supported a forward-looking approach and that perhaps consideration should begin at the next meeting to cut the policy interest rate, as the Fed should not wait until the job market collapses before cutting rates.

Waller said he believed the committee should move slowly. "You want to start slowly, gradually lowering interest rates to ensure there are no major surprises, but the key is to start the process."

He said, "For six months, the Fed has been sitting on the sidelines, waiting for the inflation shock to arrive. So far, the data has been good, and I don't think we need to wait much longer."

Waller did not agree with the view held by economists that tariffs would lead to a surge in inflation, saying "Tariffs will be a one-off factor and will not lead to sustained inflation."

The CME FedWatch Tool shows that the probability of the US Fed cutting interest rates in July is 14.5%, and the likelihood of an interest rate cut in September is close to 70%.