Fed Gov Waller explains to the Money Board why rates need to be cut .25 next week

And that we are over restricted by 1.25-1.5%

Summary of Fed Waller’s Argument for a Rate Cut
Inflation is Under Control:
Waller believes inflation is near the Fed's 2% target when adjusting for one-time tariff impacts. These price increases are temporary and not embedded in long-term inflation expectations.

Weak Labor Market Signals:
He’s skeptical of the recent BLS jobs report, noting that half the jobs were government roles (which are seasonally skewed), and private job growth remains weak. He expects big downward revisions in 2025 when more accurate QCEW data is released.

Soft Economic Data:
He points out that softer survey-based labor data is showing more weakness than the official BLS data reflects.

Restrictive Monetary Policy:
Waller believes the current Fed policy is overly restrictive—likely 1.25% to 1.5% above neutral. Even with conservative assumptions, he says the Fed is at least 1% too tight.

No Reason to Wait:
With inflation easing and GDP growth soft (just 1% in H1 2025), Waller argues there's no reason to keep policy this tight. Delaying rate cuts risks being too late due to the lag in monetary policy effects.


Does the MB disagree?