Fed Governor Waller Sees Potential for Multiple Interest Rate Cuts in 2025

Federal Reserve Governor Christopher Waller said Thursday that the central bank may cut interest rates several times this year if inflation slows as expected.

In a CNBC interview, the policymaker said he expected the first cuts to come in the first half of the year, with others to follow as economic data on prices and unemployment converge.

“As long as the data is good on inflation or continues on that path, I can definitely see a slowdown because the markets are pricing in,” Waller said in an interview with Sarah Eisen on “Squawk on the Street.”

When asked how much he could bring, he said, “It’s all driven by the data. I mean, if we make a lot of progress, you can make more.” Point increments.

“If the data doesn’t cooperate, if we get a lot of sticky inflation, you’re going to go back to two and maybe even go to one,” he said.

Traders increased their bets following Waller’s comments. Market-based odds have risen to 50% in May, although June looks more likely. CME group data. Expectations for a second rate cut by the end of the year rose to about 55%, or about 10% higher than before he said.

At the core of Waller’s tapering expectations is his belief that inflation will ease further as the year progresses, despite several months of data showing some key inflation remains stuck. The consumer price index for December, excluding food and energy, remained at a headline reading of 3.2%, down 0.1% from the previous month, though still above the Fed’s 2% target.

“Currently, I think inflation will continue to come into our target. I think the year-over-year stickiness that we’ve seen in 2024 will start to dissipate.” “So I might be a little more optimistic than some of my colleagues about inflation coming down, and that’s what drives my view of the policy path.”

At a December meeting, members of the Federal Open Market Committee split into two pencils for 2025, though comments after the meeting suggested a cautious and patient approach.

The FOMC next meets on January 28-29, when market prices are unlikely to move.

“Well, January, we’ll have to see what happens. … We’re not really in a rush to do things,” Waller said.