Federal Reserve governor Christopher Waller has stated he is advocating for an interest rate cut in December. However, he noted that the US central bank could likely adopt a more flexible, meeting-by-meeting strategy starting in January, pending the release of substantial economic data. Waller expressed concerns primarily about the labour market, citing the Fed’s dual mandate. He made these remarks during an interview with Fox Business Network on Monday (Tuesday AEDT).
According to futures contracts, investors are currently pricing in a 77 per cent probability of a rate cut at the Fed’s upcoming policy meeting scheduled for December 9-10. There appears to be significant division among Federal Reserve officials regarding the necessity of another rate reduction, especially after the cuts implemented in September and October.
Waller explained that the most recent data indicates ongoing weakness in the labour market. He also acknowledged that a series of delayed economic reports, due for release after the December meeting, could potentially complicate the decision-making process in January. Key data releases include employment statistics for October and November, scheduled for release on December 16, and November’s consumer price data, expected on December 18.
He cautioned that any unexpected rebound in inflation, job growth, or overall economic activity could raise concerns. However, Waller expressed doubt that the labour market would experience a significant turnaround within the next six to eight weeks. These considerations are central to the Federal Reserve’s ongoing assessment of the economic landscape and its monetary policy decisions.
