Federal Reserve Governor Christopher Waller expressed his support for a potential interest rate cut at the upcoming Federal Open Market Committee (FOMC) meeting on September 17-18, citing progress on inflation and signs of labor market moderation. In a speech prepared for the Council on Foreign Relations in New York, Waller stated, “Considering the achieved and continuing progress on inflation and moderation in the labor market, I believe the time has come to lower the target range for the federal funds rate at our upcoming meeting.”

Waller’s comments mark one of the strongest signals from a Federal Reserve official that a rate cut is likely in the near term. His stance aligns with other policymakers advocating for a more accommodative monetary policy as inflation moves closer to the Fed’s 2% target and the labor market shows signs of cooling.

While Waller did not specify the size or frequency of the cuts, he indicated openness to larger reductions if economic data supports such a move. “If the data suggests the need for larger cuts, then I will support that as well,” Waller noted. His remarks came after a weaker-than-expected nonfarm payrolls report, which showed job growth of 142,000 in August, below the forecast of 161,000. This reinforced concerns about a slowing labor market.

Waller emphasized that the pace and scale of future rate reductions would depend on economic conditions. He acknowledged the potential need for aggressive action if the labor market deteriorates further, stating that such steps would increase the chances of achieving a “soft landing” — avoiding a significant economic downturn while bringing inflation under control.

The financial markets responded to Waller’s comments and the jobs report, with futures pricing suggesting a higher likelihood of a quarter-point rate cut this month, and the possibility of more substantial moves later in the year, including a half-point reduction in November and another in December, according to CME Group’s Fed Watch tool.

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