A major shift in Federal Reserve policy could be coming sooner than expected. In a candid interview on CNBC’s Squawk Box, Fed Governor Christopher Waller said the central bank may be ready to cut interest rates as early as July, signaling a potential change in tone after months of holding steady.
“I think we’re in a position that we could do this — and as early as July,” Waller stated, citing cooling inflation and rising concerns about the labor market. While Waller emphasized the need for caution, he argued that there is little reason to delay if risks to employment begin to mount. “Why wait until we actually see a crash before cutting rates?” he asked.
The comments come just days after the Federal Open Market Committee (FOMC) opted to hold the benchmark interest rate steady for the fourth consecutive time, leaving it at 4.25%–4.5%. But with inflation no longer the monster it was, Waller says the time may be ripe to start easing, especially if the job market starts showing signs of stress.
While it’s unclear if Waller will win enough support among his fellow Fed policymakers, internal forecasts show a growing divide. Of 19 officials, 10 predict two to three rate cuts by year’s end, while others remain cautious.
Waller, appointed by former President Donald Trump, also shrugged off concerns that new tariffs would significantly impact inflation. Meanwhile, Trump has continued urging the Fed to slash rates dramatically, even suggesting they drop by more than two full percentage points.
Although Waller advocates a slower, data-driven approach, his remarks signal a growing readiness within the Fed to shift gears, and July could mark a turning point.
