Headline: Waller Backs December Rate Cut as Labor Market Loses Steam
Key Takeaways
The Federal Reserve’s Christopher Waller signaled clear support for a quarter-point interest rate cut at the December 9–10 FOMC meeting, citing a cooling labor market, moderating growth, and inflation running close to target. In remarks delivered in London, the Fed governor said the latest indicators—drawn from a broad mix of private and available public data during the 43-day government shutdown—suggest the job market is “near stall speed,” with rising unemployment claims, more layoffs, and limited wage pressure.
Waller noted that underlying inflation, after removing tariff-related distortions, is hovering near the Fed’s 2% goal and inflation expectations remain anchored. With growth slowing and consumer sentiment deteriorating, he cautioned that the current restrictive stance of monetary policy may be falling hardest on lower- and middle-income households, exacerbating affordability challenges in housing and autos.
Addressing calls from some Fed officials to wait for clearer signals, Waller argued the central bank is not “in a fog” and that the existing data are sufficient to act. He added that it is unlikely any imminent releases—including the delayed September employment report—would shift his assessment. A December rate cut, he said, would provide insurance against further labor-market weakness and move policy closer to neutral.
Key Points: – Waller supports a quarter-point interest rate cut at the December 9–10 FOMC meeting. – He sees the U.S. labor market “near stall speed,” with rising claims, more layoffs, and muted wage gains. – Underlying inflation, excluding tariff effects, is close to the Fed’s 2% target; expectations are stable. – Growth is cooling and consumer sentiment is weakening, with restrictive policy hitting lower- and middle-income households. – Housing and auto affordability remain pressure points under current borrowing costs. – Waller believes available indicators justify action now; a cut would serve as insurance and align policy closer to neutral.
Context
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What To Watch
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