WASHINGTON. A senior official at the Federal Reserve has publicly voiced support for cutting interest rates at the central bank’s meeting later this month (July 29-30, 2025) breaking ranks with the cautious stance taken by several of his colleagues.
Governor Christopher Waller said on Wednesday (July 16) that the time has come to begin easing monetary policy, citing cooling labor data and tariff related price spikes that he believes are likely to fade. His call adds weight to growing speculation over whether the Fed will deliver its first rate cut since the tightening cycle began but it also underscores a visible split within the Federal Open Market Committee(FOMC).
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Fed Governor Waller Calls for July Rate Cut, Says Inflation Is Losing Steam
Governor Waller made his remarks during a public event at the Global Interdependence Center’s monetary policy forum in New York. He argued that recent data gives the Fed enough room to start cutting its benchmark rate by 25 basis points at the upcoming July 29-30 decision.
In his speech, Waller pointed out that inflation, which remains still above target, has shown signs of steady improvement. He also highlighted that much of the recent increase in prices appears to be tied to short term effects from new tariffs, not broader demand pressures. “If we see inflation continuing to moderate, I believe it will soon be appropriate to ease up” he said during the event.
Waller’s remarks also come with a practical caution. While he supports a cut now, he emphasized that the Fed should still be guided by the data and be ready to pause again if inflation begins to rebound.
This is not the first time Waller has been among the more dovish voices inside the central bank. According to reporting from Reuters, he and Fed Governor Lisa Cook remain among the few top officials currently leaning toward near term rate reductions while most members of the FOMC have continued to urge patience.
Recent Economic Data Strengthens the Argument for a Policy Shift
Waller’s support for a rate cut has not come out of thin air. Several new data points released over the past two weeks appear to be tilting the case in his favor. The Consumer Price Index for June showed an annual inflation rate of 2.7 percent, and while that figure is still above the Fed’s long-term target of 2 percent, it marks a continued cooling trend from earlier highs.
Waller believes much of the recent price pressure is coming from temporary external shocks, particularly the tariffs that went into effect earlier this year. These new import duties were aimed at countering a widening trade deficit with China but are now showing up in the data as price bumps in certain goods categories.
While some policymakers see this as a warning sign, Waller described these increases as “temporary noise” and said they should not prevent the Fed from acting if broader price indicators are improving. He also referred to the recent softening in job market growth, noting that while unemployment remains low, the pace of hiring has slowed and wage pressures are not as strong as they were earlier in the year.
Factors Waller Cited in His Argument:
- Inflation slowly moving downward, now at 2.7 percent
- Price increases driven mostly by tariff-related effects
- Slower wage growth and hiring momentum
- No strong signs of reacceleration in consumer demand
He concluded that under these conditions, waiting too long to lower interest rates could unnecessarily slow the economy, especially at a time when some signs of weakness are beginning to appear.
Public Remarks Reveal Growing Split Inside the Federal Reserve’s Policy Committee
Waller’s comments stand in contrast to those of several other members of the Federal Open Market Committee, who have expressed more caution in recent weeks. Federal Reserve Chair Jerome Powell has remained non-committal about a July rate cut, emphasizing that the central bank needs more consistent evidence that the inflation is sustainably approaching 2 percent before making a move.
According to reporting by Reuters, Waller and fellow Governor Lisa Cook are currently in the minority, as most officials have signaled they would prefer to wait until at least September before deciding. The underlying concern among many on the committee is that acting too soon could reverse the hard-won progress the Fed has made in reducing inflation from the peak levels of 2023.
While no official tally of internal views is published, recent speeches and interviews from various Fed district presidents suggest a near even divide with a slight edge toward delaying action. Minneapolis Fed President Neel Kashkari and Boston Fed President Susan Collins have both spoken in favor of holding rates steady for now pointing to lingering risks.
What Divides the Committee:
- Pro-Cut Voices: Christopher Waller, Lisa Cook (emphasizing tariff effects and slowing momentum)
- Cautious Voices: Powell, Kashkari, Collins and others (focused on avoiding premature easing)
- Swing Factors: Future inflation data, labor reports and global trade developments
This internal division is not unusual, but it does make the outcome of the July 29, 30 meeting less predictable than usual. Waller himself acknowledged that his view may not prevail, though he urged his colleagues to consider the costs of waiting too long.
Political Pressure Rises as President Trump Renewed Criticism of the Fed
As the Federal Reserve heads toward its late July meeting, President Donald Trump is once again voicing frustration over the pace of rate cuts. Trump has repeatedly described the Fed’s approach as “too slow” in light of current economic signals even as it remains legally difficult to remove Fed Chair Jerome Powell without cause.
Trump’s remarks, which came following private conversations with congressional Republicans, have drawn attention both inside and outside the Fed. One analyst at the central bank, speaking to Reuters under anonymity, cautioned that such public comments can “drown out” the Fed’s carefully crafted data first communications.
While the Federal Reserve operates independently from the White House, tensions between the executive branch and the central bank are not new. During his earlier term in office, Trump frequently pressured the Fed to lower rates and often accused its leadership of making decisions that slowed economic growth. Those same themes are beginning to return, although in a different economic setting marked by slower inflation and tighter credit conditions.
Inside the Fed, some officials have privately voiced concern that renewed political pressure could complicate their messaging. According to Reuters, the unease is not only about the comments themselves but also about how they shape expectations among investors and the public. Policymakers are aware that any move they make after such remarks can appear politically influenced, even when based entirely on economic data.
So far, Powell has not responded directly to the President’s recent statements. He has continued to emphasize that the Fed will base its decisions on inflation trends, labor market signals, and broader financial stability, not external opinion. But with the July 29-30 meeting approaching and the Fed still divided internally, the reemergence of political pressure adds one more factor to a closely watched decision.
What a July Rate Cut Could Mean for Borrowers, Businesses, and Markets
If the Federal Reserve moves forward with a rate cut at its July meeting, the effects could start to appear across several parts of the economy. It would not be a dramatic shift, but the signal it sends may carry weight.
Borrowers are likely to see modest changes first. Credit card interest rates, personal loan costs, and other forms of consumer debt could ease slightly over time. The change would not be immediate for most, but it may give some breathing room to households that are managing high repayment burdens.
For small and mid-sized businesses, even a slight drop in rates could help with financing. Many business owners have delayed hiring or expansion plans over the past few months due to rising costs. If borrowing becomes a little more affordable, it could push some of them to move forward.
Financial markets have already shown signs of reacting. Bond yields dipped after Waller made his comments public, and stocks moved higher, especially in the financial and tech sectors. Traders are also focused on what the Fed will say during its announcement. Sometimes, the message behind a move has more impact than the move itself.
Economists are still divided. Some believe a rate cut would give the economy support at the right time. Others worry that it may send the wrong message if inflation starts to rise again. But if the Fed cuts now, it may also give itself room to pause or adjust course later if needed.
Key Factors to Watch Before the Federal Reserve Makes Its July Decision
As the July 29 or 30 meeting approaches, Fed officials are likely paying close attention to a few developments that could influence their final decision. The committee has not reached a consensus and each data point still holds weight.
Inflation is one of the main drivers. The most recent numbers showed a yearly rise of 2.7% in June. While that is lower than earlier levels, it remains above the Fed’s preferred range. Some policymakers are willing to act now while others want more evidence that prices are moving in the right direction.
Labor market trends are another area under review. Hiring has slowed in recent months and wage growth is no longer as strong. Still, unemployment is low and some sectors continue to show strength. That mix makes it harder to draw a clear line.
External factors may also play a role. The Fed is watching global shifts in trade and financial conditions. Currency moves, commodity prices and actions by foreign central banks can all affect how domestic risks are assessed.
There is also growing awareness that the tone of the Fed’s message will matter. Public expectations are sensitive. Even if the Fed decides to keep rates unchanged, how that choice is explained could affect how markets respond.
With a divided committee and only days to go the outcome remains open. Comments from Fed officials, along with any late economic releases, may offer a better sense of where the balance lies.
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