Federal Reserve Governor Christopher Waller said Friday that the central bank could begin lowering interest rates as soon as next month, arguing that inflation has cooled and that policymakers should not wait for the labor market to weaken before acting.
“I think we’re in the position that we could do this as early as July,” Waller said in an interview on CNBC. “That would be my view, whether the committee would go along with it or not.”
Waller’s remarks make him the most prominent Fed official to signal support for near-term easing. While Chair Jerome Powell and others have emphasized caution—pointing to the possibility that new tariffs could lift inflation—Waller said those effects would likely be temporary and should not prevent the central bank from beginning to lower its benchmark rate.
“It should be a one-off level effect and not cause persistent inflation,” Waller said. “We’ve been on pause for six months to wait and see, and so far, the data has been fine.”
He added: “Even if the tariffs come in later, the impacts are still the same.”
Waller also said the Fed should act before the labor market begins to deteriorate. “If you’re starting to worry about the downside risk [to the] labor market, move now, don’t wait,” he said. “Why do we want to wait until we actually see a crash before we start cutting rates?”
Waller estimated that interest rates are still well above a neutral level and could be lowered without overstimulating the economy. “I think we’ve got room to bring it down, and then we can kind of see what happens with inflation,” he said.
That logic echoed comments from President Donald Trump earlier this week, who criticized Powell’s refusal to cut rates and suggested that inflation could be dealt with later. “If there’s inflation in six months or nine months you…raise the rates,” Trump said Wednesday. “Every time I did this, I was right, he was wrong.”
While Waller made clear that the Fed’s role is not to reduce government borrowing costs—“Our mandate from Congress tells us to worry about unemployment and price stability,” he said. “It does not tell us to provide cheap financing to the U.S. government.”—his policy reasoning overlaps with the president’s: move early, adjust if needed.
His remarks also reinforced the argument he laid out earlier this month in a speech at the Bank of Korea International Conference. There, Waller said: “The economics behind a tariff increase implies it should have a transitory effect on prices—tariffs raise prices once, but those prices don’t keep going up.” He acknowledged the political risk of reintroducing the word “transitory” into the Fed’s lexicon, but said tariffs should not derail the Fed’s easing plans.
The Federal Open Market Committee voted unanimously this week to hold rates steady for the fourth straight meeting. Projections released alongside the decision showed a divided outlook: seven participants expect no cuts this year, while ten see two or more. Market pricing continues to suggest the first rate cut will come in September.
Waller’s comments, however, point to growing support within the Fed for action sooner. “You’d want to start slow and bring them down, just to make sure that there’s no big surprises,” Waller said. “But start the process. That’s the key thing.”
With Powell’s term expiring in May 2026, Waller has increasingly drawn attention as a possible successor. His steady, data-driven approach—more open to cuts than Powell, but grounded in neutral-rate estimates and empirical inflation data—may offer the kind of clarity markets and policymakers alike are looking for.
The Fed’s next policy meeting is scheduled for July 30–31.