Federal Reserve Governor’s Remarks

Federal Reserve Governor Christopher Waller stated that current economic data justifies action, hinting at potential rate cuts by the Federal Reserve.

At the University of Notre Dame, Waller referenced recent jobs data, indicating a labor market that correlates with modest economic growth:

“Today’s job report continues the longer-term pattern of a softening of the labor market that is consistent with moderate growth in economic activity,” he remarked.

He emphasized, “While the labor market has clearly cooled, based on the evidence I see, I do not believe the economy is in recession or necessarily headed for one soon.”

According to Waller, the Federal Reserve may need to act decisively to cut interest rates, though he stated such action will depend on data rather than pre-set notions of timing. He mentioned that the August job data confirms a trend of softening in the labor market, which aligns with moderate economic growth.

He also indicated that the Fed might ‘front-load’ rate cuts, suggesting a 50 basis point reduction could happen at the September meeting.

Despite the labor market cooling, Waller is not currently forecasting a recession. His analysis arrives as the Fed closely scrutinizes economic indicators to determine appropriate monetary policy.

Analysts from Vital Knowledge noted Waller’s dovish tone, similar to Chair Powell at Jackson Hole, indicating a Fed pivot in response to cooling employment and inflation. They remarked that while there’s no firm commitment to a specific rate cut on September 18, a 50 basis point reduction seems increasingly probable.

Citi economists also predicted a 50 basis point cut in September, underlining the markets’ growing concerns about a potential recession.