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Fed's Waller: Weak job market justifies rate cut in December

Federal Reserve (Fed) Governor Christopher Waller said that the US central bank should cut the interest rates when policymakers meet in December, Bloomberg reported late Monday. Waller added that he’s grown concerned over the labor market and the sharp slowdown in hiring.

Key quotes

Makes case for continuing interest rate cuts.

Supports a quarter-percentage-point rate cut at Fed's December 9-10 meeting. 

Will provide additional insurance on labor market. 

Worries restrictive monetary policy is weighing on economy. 

US labor market weak, near stall speed. 

Underlying us inflation is close to 2% target. 

Inflation expectations are well-anchored. 

Tariffs are one-time price level shocks; doesn't see any factors that would cause acceleration in inflation. 

Us gdp growth has slowed in second half of 2025. 

Dour consumer sentiment lines up with reports from firms of slackening demand. 

Affordability of housing, cars poses ongoing challenge for consumers, weighing on spending growth.

Wealth of data paints 'actionable picture' of economy, despite delay in official data. 

Unlikely that any data, including upcoming jobs report, would change view that another rate cut is in order. 

If we saw a rebound in job market, there would be less need for insurance cuts. 

Our balance sheet is pretty much spot on. 

Rates are creeping up in markets, suggesting we are close to scare reserves. 

I don't perceive balance sheet staying where it is, natural reserve demand will push it up. 

Could be as short as a month or couple of months before balance sheet grows again.

On soft data, I've been hearing more and more about plans for layoffs.

We should be paying more attention to labour market than current inflation overshoot.

Declines to comment on whether president trump's remarks on rates are helpful for the Fed.

Hearing that firms are paying for ai investment by not hiring.

Firms say low and middle income households are not spending, hitting hiring.

25 bp rate cut won't get job growth back to where it was.

We might soon see the least group think you've seen from the Fed.

Razor-thin votes can stop people having confidence what the next vote will be.

Neutral level of rates is not clear.

Monetary conditions are loose for corporate America but not for ordinary households. 

Things are not great for lower part of income distribution. 

6% budget deficit is not sustainable in long run but not likely to lead to crisis in next 5 years. 

We haven't seen any market signals of problems from higher budget deficit. 

I would have stopped QE a lot sooner

Financial markets are capable of 'taking a beating.'

I don't expect big changes in fiscal stimulus next year. 

Fed needs a better reason than inflation having been above target for 5 years to not cut rates. 

Business investment is turning down if you exclude AI.

Financial market looseness is not part of my mandate, I'm focused on inflation and labor market. 

Home builders say weak job prospects are stopping buyers. 

Will be hard to judge how accurate October jobs data will be. 

Past experience has made the Fed more wary about 50 bp cuts. 

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

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Lallalit Srijandorn

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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