A US Federal Reserve official, Christopher Waller, indicated on Friday that the central bank might consider cutting interest rates as early as July.
This comes after policymakers maintained rates unchanged for the fourth consecutive meeting this week.
Speaking in an interview with CNBC, Fed Governor Waller stated, “We can start the process of bringing rates down, and then if there’s some big shock due to maybe the Middle East conflict, we can pause.”
He added, “I think we’re in the position that we could do this, and as early as July.”
The Federal Reserve has held its benchmark lending rate steady between 4.25 per cent and 4.50 per cent since the beginning of the year, despite repeated calls from President Donald Trump for rate reductions.
Credit: Reuters
Fed Chair Jerome Powell had previously explained on Wednesday that the bank would make more informed decisions by waiting to understand the full impact of Trump’s tariffs on the US economy, expecting more clarity over the summer.
Waller agreed with a cautious approach, suggesting, “I think you’d want to start slow… But start the process; that’s the key thing.”
He further argued that central banks should “look through tariff effects on inflation” and focus on the underlying trend of price increases, anticipating that any tariff-related cost impacts would be a “one-off level effect” not causing persistent inflation.
Waller’s comments highlight growing divisions among Fed policymakers regarding the possibility of rate cuts this year.
Powell had noted that tariff effects on inflation could be either temporary or lasting, affirming that officials are “well-positioned to wait to learn more” before adjusting interest rates.
Responding to Trump’s remarks that rate cuts would help reduce national debt interest, Waller asserted that ensuring fiscal sustainability is the responsibility of Congress and the Treasury Department, not the Fed.
He emphasised the central bank’s mandate: “Our mandate from Congress tells us to worry about unemployment and price stability, and that’s what we’re doing. It does not tell us to provide cheap financing to the US government.”
