Federal Reserve’s Outlook on Rate Cuts

Date: Thursday
Source: Investing.com

In an interview with CNBC, Federal Reserve Governor Christopher Waller expressed optimism about the December inflation data. He stated that if inflation continues along the current trajectory, we might see interest rate cuts in the first half of the year.

> “If inflation data comes in as it has, I’d expect a cut in the first half of the year,” Waller noted.

Waller believes that a March rate cut cannot be ruled out and indicated that there may be more cuts than the market currently anticipates, suggesting three or four cuts could be feasible this year if the data supports it.

While he’s aware that his view might be more optimistic than other Fed colleagues, Waller mentioned that inflation seems to be returning to trend and should align closer to the target.

Regarding the recent jobs report, he stated that the strong numbers are a recovery from previous weaker readings. When weighing all indicators, Waller affirmed that the employment market is solid, yet not booming.

He also mentioned that while he acknowledged potential disruptions from future data, incoming President Trump’s tariffs are unlikely to lead to increased inflation. Waller suggested that he does not foresee tariffs having a significant impact on inflation.