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Federal Reserve board of governors member Christopher Waller re-upped his support for an interest rate cut in September, expressing openness to additional cuts in the next three to six months to prevent the labor market from tumbling.
“Based on what I know today, I would support a 25 basis point cut at the Committee’s meeting on Sept. 16 and 17,” Waller said in prepared remarks at the Economic Club of Miami event Thursday.
“While there are signs of a weakening labor market, I worry that conditions could deteriorate further and quite rapidly, and I think it is important that the FOMC [Federal Open Market Committee] not wait until such a deterioration is under way and risk falling behind the curve in setting appropriate monetary policy,” the Fed board member added.
He was one of the two Federal Reserve governors to dissent from the board’s latest decision to hold the interest rates steady, between 4.25 percent to 4.5 percent. It was the first double dissent by two members of the board in more than three decades.
Waller, an appointee of President Trump during his first term, is running to replace Fed Chair Jerome Powell, whom the president has repeatedly criticized for not lowering interest rates. Powell, whose term as chair is set to end in May, signaled last week that a rate cut could be on the horizon.
“While I believe we should have cut in July, I am still hopeful that easing monetary policy at our next meeting can keep the labor market from deteriorating while returning inflation to the FOMC’s goal of 2 percent,” Waller said. “So, let’s get on with it.”
He also argued that an interest rate cut should not exceed a quarter point, but that could change if the August jobs report shows a weaker economy.
“While I judge that the FOMC should have begun this process in July, based on the data in hand, I don’t believe that a cut of larger than 25 basis points is needed in September,” the federal reserve governor said. “That view, of course, could change if the employment report for August, due out a week from tomorrow, points to a substantially weakening economy and inflation remains well contained.”
After a weak July jobs report and a massive downward revision from prior months, the president terminated the Bureau of Labor Statistics head Erika McEntarfer, accusing her of rigging numbers at the detriment of the administration.
Trump then nominated E.J. Antoni, the head economist and a fellow at the Heritage Foundation, for the position that requires Senate confirmation.