Fed Governor Christopher Waller expressed optimism about the US inflation outlook during an interview with CNBC, signaling that rate cuts may be on the table sooner than previously anticipated.
Waller highlighted the positive inflation data released yesterday, describing it as “very good.” He suggested that, if this trend continues, “it’s reasonable to think rate cuts could happen in the first half of the year.”
Waller noted that Fed’s median estimate of the neutral policy rate indicates the potential for three or four rate cuts in 2025, contingent on the evolution of economic data.
However, he tempered this with caution, stating, “If the data doesn’t cooperate, then you’re going to be back to two, maybe even one if we just get a lot of sticky inflation.”
On the labor market, Waller described conditions as stable rather than overheated. He pointed out that indicators like hiring rates, quit rates, and wage growth remain restrained, which aligns with Fed’s restrictive policy stance.
