MNI BRIEF: Waller Repeats Fed Should Consider July Cut

Federal Reserve Governor Chris Waller on Thursday again called for the central bank to consider lowering interest rates at its July 30 meeting and said his views are not politically driven. 

"We're not seeing a lot of tariff inflation yet," he said at an event at the Dallas Fed. "For that reason, I've been arguing that we could start lowering the policy rate from our current setting. That, given where the SEP or Survey of Economic Projections, is, the policy rates are still pretty restrictive. So we could lower that. Now, some people have a different view of what's restrictive."

Waller added that he is giving a speech next Thursday on his view of the economic outlook, which he acknowledged is in the minority among his FOMC colleagues. "Just going off the dot plot that we publish, for half or at least half the committee, the policy rate is 125 to 150 basis points above their long run policy rate," the Fed governor said. (See: MNI INTERVIEW: Bostic Backs Go-Slow On Rates As Tariffs Linger) 

"GDP growth is going to be right around 2% or less than 2% the first half of this year. Unemployment is right at what we think long run should be, and inflation is running about a half a percentage point above target," Waller said. "But we're 150 basis points where we think we should be in the long run if we're hitting all those goals. So I just made the argument I think we're just too tight, and we could consider cutting the policy rate in July. That's my view. I'm kind of in the minority on this, but I've tried to lay out very clearly in economic terms why we could do this. It's not political."