Fed’s Waller Says Rate Cuts Could Still Happen This Year

Federal Reserve Governor Christopher Waller said there is still a chance for interest rate cuts in 2025. He made this statement on Monday in Seoul.

Waller explained that even though tariffs may push inflation higher in the short term, he believes rate cuts could happen if inflation continues to improve and the job market stays strong. He said, “Assuming underlying inflation continues to make progress and the labor market remains solid, I would support ‘good news’ rate cuts later this year.”

He also updated his view on tariffs, now expecting an average trade-weighted tariff rate of 15%, which is between his earlier estimates of “small” and “large” tariff impacts.

Waller warned that the large U.S. fiscal deficit, which is around $2 trillion, is causing long-term Treasury yields to rise. He said this is not due to demand but rather the price effect of the deficit.