The governor of the federal reserve, Christopher Waller, said on Friday that economic data could justify lower interest rates next month, assuming the concerns of pricing peaks supplied at the prices and highlighting concerns about recent labor market data.
In a CNBC TV interview On Friday, he said that decision-makers should go beyond short-term pricing effects on inflation and focus on the underlying trend, which, according to him, has been favorable in recent months.
“I label these drops in” good news “rate when inflation comes down to the target. We can really reduce rates. I have said that since about November 23,” said Waller. “So I think we are in this position. We could do it and from July. ”
In fact, inflation, unemployment rate and GDP growth take place on or near Fed long-term objectives, but rates are 1.25 to 1.50 percentage points higher than neutral neutral rate, he stressed, adding that cuts could gradually arrive with flexibility to take a break if necessary.
However, he warned that the job market is OK but is not as strong as in 2022, noting a higher 25 years in the unemployment rate for the creation of graduates and slower jobs.
“If you are starting to worry about the risk of decline in the labor market, move now, do not wait,” said Waller, a possible candidate to replace the president of the Fed, Jerome Powell, at the end of his mandate in May 2026, in the maintenance of the CNBC.
Comments come two days after the Federal Open Market Committee (FOMC) voted unanimously To maintain its target key loan rate in a range between 4.25% to 4.5%, which has been maintained since December. The Committee reported “somewhat high” inflation and a “solid” labor market in a June 18 press release.
Who attracted the anger of President Donald Trump, who called Powell A “total and complete moron” on TRUTH social for the maintenance of stable interest rates and thinks that the reference rate should be 2.5 percentage points lower than the current level.
While the Fed remains optimistic on the job market, other indicators indicate weakness.
The four -week mobile average of the first unemployment complaints is the highest that it has been since August 2023, by this week of Labor this week report. Challenger’s May Cutt report recorded an increase of 47% of one year to the other of the dismissal intentions, the most important plans from the services of services, retail and technology.
A monthly investigation By the Federal Reserve Bank of Philadelphia, which follows the commercial activity of manufacturing in the region of the Atlantic environment recorded a global reduction in employment in June, its employment index falling to its lowest reading since May 2020. The index has held its value in May, missing Economists’ expectations of a slight increase in commercial activity.
The National Federation of Independent Companies can Job report noted that 34% of small businesses have declared job openings that they could not fill in May, unchanged from April and the lowest since January 2021.
As the Fed maintains a waiting strategy in anticipation of inflation supplied at the prices, economists are divided on how the Fed could navigate in the economic uncertainty of the country – and how to interpret recent data suggesting a weakened labor market. None of the economists contacted by Fortune See a drop in the rate in July.
“FOMC forecasts to low continuous unemployment are pious wishes,” wrote Samuel Tombs, American economist in the United States, US economist, US economist, Oliver Allen, US economist in a June 20 report. “We believe that the Committee is again unduly bloody on the prospects of the unemployment rate.”
The tombs and Allen of the macroeconomics of the pantheon expect the unemployment rate going from 4.2% to 4.6% in the third quarter, and to 4.8% in the fourth, which exceeds median median forecasts of 4.5%.
“Pressure on the labor market increases as the pricing shock makes its way through the economy,” said Allen in a data note.
Consumers have not yet experienced the complete effects of price increases due to prices, and Economists say This will happen in summer.
“”[Economic activity] was artificially stimulated at the beginning of 2025 while companies and consumers rushed to charge purchases before before the expected commercial restrictions, “said Ey-Parthenon chief economist Gregory Daco Fortune in an email.
Daco expects the training effects of higher prices will be observed in the coming months, “catch up with inflationary pressures, weaken labor market conditions, compress beneficiary margins, limit capital expenditure and limit household demand”.
It expects consumption expenses and commercial investment deceleration significantly, and for the culmination of tariff effects on the economy to slow down GDP growth at close speed, production increasing by 0.8% in annual shift in the fourth quarter.
The anticipation of pressures on summer inflation causes economists to weigh when the Fed will reduce rates, especially if the labor market data continues to concern them.
Michael Pearce, deputy chief economist in Oxford, estimates that recent figures for initial unemployment complaints show progressive softening in the labor market, he said Fortune in an email. “Despite this, with imminent risks of inflation, we do not think that the economy is weakening enough to force the federal reserve to rate drops in the coming months,” wrote Pearce.
Unemployment requests for federal workers remain low at the February levels, added Pearce. Recent judicial decisions have planned the planned economist the calendar of federal workers later this year.
However, not everyone considers the recent initial data on claims as a bell tower for a slowdown in the labor market.
“What I see is a labor market that has resisted exceptional uncertainty and economic uncertainty,” said the morning chief economist John Leer Fortune.
The data collection and analysis company examines 10,000 people each week to determine whether they have lost salary or income and collect data from a “standardized version of the household survey” used to calculate the unemployment rate. From their number, Leer said he saw no evidence of a significant weakening in the labor market.
“Companies hesitate very well to draw prematurely or dismiss workers while potentially there is money to make by keeping workers on pay and selling more and having higher income,” said Leer.
Regarding potential pricing effects on the labor market, Leer has said that he can take up to two years for small businesses with which his business is working to feel the high costs of inputs that accompany import taxes.
“You will see a kind of continuous hike of higher prices over time, because companies finish all their excess inventories and must count on imports to a greater extent,” he said.
