Federal Reserve Governor Christopher Waller reiterated his expectation for interest rate cuts later this year, even as he acknowledged that new tariffs could temporarily push inflation higher. Speaking at a Bank of Korea conference in Seoul, Waller emphasized that policymakers should look beyond short-term price fluctuations caused by trade measures, focusing instead on broader inflation trends and labor market conditions. His remarks suggest the Fed remains on track to ease policy in 2024, provided economic data continues to align with its goals.
Waller noted that while tariffs may contribute to higher prices in the coming months, their effect on inflation is likely to be transitory. He argued that the Fed should prioritize underlying inflation metrics—particularly core inflation, which excludes volatile food and energy prices—when making policy decisions. “If core inflation continues moving toward our 2% target and the labor market stays strong, I would support a rate cut later this year,” he said. This stance reflects confidence that the economy can absorb tariff-related price pressures without derailing disinflation.
The Fed governor’s comments highlight the central bank’s delicate balancing act between controlling inflation and sustaining economic growth. Waller expressed optimism that a resilient job market would allow for rate cuts without reigniting price pressures. However, he cautioned that policymakers remain data-dependent, leaving room for adjustments if inflation proves stickier than expected. Markets will closely watch upcoming employment and inflation reports to assess whether Waller’s projected “good news” scenario unfolds, paving the way for monetary easing in late 2024.
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