Fed Governor Waller says rate cuts possible later this year

Federal Reserve Governor Christopher Waller said he is cautious about current conditions but still sees the possibility of policy rate cuts later this year, citing labor market developments and uncertainty around the war with Iran.

Federal Reserve Governor Christopher Waller said on Friday that current economic conditions warrant caution but he still sees the possibility of interest rate cuts later this year. He made the remarks in a CNBC interview and pointed to recent labor market developments and uncertainty related to the war with Iran as reasons for a more conservative approach. Waller had previously pushed for rate cuts and dissented in January, but he joined the FOMC majority this week in pausing the policy rate. Market expectations have shifted and now largely discount reductions through 2026 and into 2027. Key points: - Waller said caution is warranted now but that he could again advocate cutting the policy rate later this year if conditions weaken. - He cited changes in the labor market and uncertainty from the war with Iran, along with higher oil prices, as reasons for a more conservative stance. - Waller dissented in January in favor of cuts but concurred with the committee's pause earlier this week. - Markets have largely reduced expectations for near-term rate cuts, moving away from earlier forecasts of multiple cuts this year. Summary: Waller's comments indicate that the Fed remains open to future rate cuts but is awaiting clearer signals from economic data and geopolitical developments. The immediate policy position is a pause by the Federal Open Market Committee and market pricing has shifted accordingly. Undetermined at this time.