Fed Governor Waller backs December rate cut as support for weakening labor market

Federal Reserve Governor Christopher Waller on Monday voiced support for another interest rate cut at the central bank’s December meeting, saying he’s grown concerned over the labor market and the sharp slowdown in hiring.

In an increasingly divided Fed, Waller’s comments put him squarely in the camp of those looking to ease monetary policy to head off further danger in the jobs picture. Others, including multiple regional presidents, have expressed opposition in recent days to more cuts as they view inflation as a persistent economic threat that could be reignited by additional easing.

“I am not worried about inflation accelerating or inflation expectations rising significantly,” Waller said in prepared remarks delivered to a group of economists in London. “My focus is on the labor market, and after months of weakening, it is unlikely that the September jobs report later this week or any other data in the next few weeks would change my view that another cut is in order.”

The rate-setting Federal Open Market Committee next meets Dec. 9-10. Markets are divided over which way the panel will swing following consecutive quarter percentage point, or 25 basis point, cuts at meetings in September and October.

Earlier Monday, Vice Chair Philip Jefferson was noncommittal on the upcoming meeting, saying only that the current economic climate calls for policymakers to “proceed slowly” as it contemplates further cuts. Boston Fed President Susan Collins said Wednesday that she sees a “high bar” for more easing.

Waller specified that he favors another quarter-point move. Governor Stephen Miran, who like Waller is an appointee of President Donald Trump, favored half-point moves at the prior two meetings.

While he has spoken out multiple times in recent months in favor cuts, Waller updated his comments to reflect recent developments. Absent government data during the recently ended shutdown, the policymaker cited a variety of other data points showing weak demand in the labor market and pressure on consumers.

At the same time, he said price data has indicated that tariffs will not have a long-lasting impact on inflation. Cutting rates again will be an exercise in “risk management,” a term Chair Jerome Powell also has been using.

“I worry that restrictive monetary policy is weighing on the economy, especially about how it is affecting lower-and middle-income consumers,” Waller said. “A December cut will provide additional insurance against an acceleration in the weakening of the labor market and move policy toward a more neutral setting.”

Waller rejected claims that the Fed has been “flying blind” on policy as the shutdown suspended almost all official government economic data.

“Despite the government shutdown, we have a wealth of private and some public-sector data that provide an imperfect but perfectly actionable picture of the U.S. economy,” he said.