MNI BRIEF: Fed's Waller Backs December Rate Cut

Federal Reserve Governor Christopher Waller said Monday the central bank should cut interest rates again next month because the labor market continues to deteriorate, while the inflationary effect of tariffs will be temporary. 

"With underlying inflation close to the FOMC’s target and evidence of a weak labor market, I support cutting the Committee’s policy rate by another 25 basis points at our December meeting," said Waller, who is on President Donald Trump's short-list to replace Jerome Powell as Fed chair next year.

"I am not worried about inflation accelerating or inflation expectations rising significantly. My focus is on the labor market, and after months of weakening, it is unlikely that the September jobs report later this week or any other data in the next few weeks would change my view that another cut is in order."

Waller said restrictive monetary policy is unduly weighing on a slowing economy, especially for lower- and middle-income households. "A December cut will provide additional insurance against an acceleration in the weakening of the labor market and move policy toward a more neutral setting." (See MNI INTERVIEW: Fed's Risk Management Cuts Not Enough-Revelio)