Federal Reserve Governor Waller Predicts Possible Interest Rate Cuts in 2025
Federal Reserve Governor Christopher Waller hinted at the possibility of multiple interest rate cuts this year if inflation eases as anticipated. In an interview with CNBC, Waller suggested that the first rate cut could happen in the first half of the year, with more to follow depending on economic indicators.
Waller emphasized that the decision to cut rates will be data-driven, with the potential for three or four cuts in quarter percentage point increments if progress is made. However, if inflation remains stubborn, the number of cuts could be limited to two or even one.
Following Waller’s comments, traders adjusted their expectations for rate cuts, with increased odds for a May move and a second reduction by the end of the year. Waller’s optimism for easing is based on his belief that inflation will gradually decline throughout the year, despite recent data showing sticky prices.
While FOMC members had initially projected two cuts in 2025, Waller’s remarks suggest a cautious and patient approach to monetary policy. The next FOMC meeting is set for Jan. 28-29, with no expected rate changes.
In summary, Waller’s outlook on interest rates hinges on inflation trends and economic data, with a focus on gradual easing if conditions improve. The Fed remains vigilant in monitoring price stability and unemployment levels to guide its policy decisions.