A Clear Signal for the Next Meeting to Rate Cuts

Reiterating his earlier stance, Waller stated that the Fed should move ahead with a rate cut at its upcoming policy meeting. He also suggested that multiple rate reductions could follow in the months ahead, depending on economic data.

Flexibility in the Pace of Cuts

Waller emphasized that the Fed does not need to stick to a rigid pace when adjusting interest rates. “We can always recalibrate the speed of cuts,” he explained. This underscores the central bank’s data-driven approach, allowing it to adapt policy in response to evolving conditions.

Concerns Over the Labor Market

Another key point raised by Waller was the recent softening in the labor market. He stressed that the Fed must act to prevent further deterioration, highlighting the central bank’s dual mandate of maintaining price stability while supporting employment.

Inflation Outlook for Rate Cuts

While acknowledging that inflation could see slight upward moves in the short term, Waller dismissed concerns of a lasting rebound. He expects inflation to move closer to the Fed’s 2% target over the next six months, reinforcing confidence in the current policy path.

Growth Expectations: Slowdown, Not Recession

Waller ruled out the likelihood of a recession but noted that U.S. economic growth is likely to decelerate. He also argued that while tariffs may weigh on growth this year, they are unlikely to create long-term inflationary pressures.

Addressing Fed Chair Speculation

Finally, Waller clarified that he has had no discussions regarding the possibility of becoming Fed Chair, putting an end to speculation surrounding his potential candidacy.

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Trump’s Advisers Turn to Waller for Fed Chair

Sources close to President Trump say that Fed Governor Christopher Waller is emerging as a strong candidate to succeed Jerome Powell. What stands out for Trump’s team is Waller’s willingness to base his monetary policy decisions not only on current data but also on forward-looking forecasts. This approach is especially appealing in a time when rate cuts are back on the table.

Pro-Crypto Attitude Sets Him Apart

Waller has not only earned recognition in traditional economic circles but also among the crypto community. His previous supportive remarks about digital assets have drawn attention within the space.

During the latest FOMC meeting, Waller voted in favor of a rate cut—positioning himself as a more dovish voice at the Fed. That move aligns closely with what Trump’s economic team may be seeking in a potential chair.

No Direct Meeting With Trump—Yet

While Waller has reportedly met with members of Trump’s advisory team regarding the position, he has not yet had a one-on-one meeting with the President himself. Still, his name remains high on the shortlist.

Deep FED Knowledge Adds Value

What makes Waller even more appealing is his extensive expertise in the workings of the Federal Reserve system. With years of experience in central banking, he is seen as a technically strong and strategically aligned choice for the role.

Click here to also review other potential candidates.

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No Change in Rates Anticipated

Since the start of the year, the Fed has maintained its interest rates, and analysts expect this stance to continue tonight. Market pricing currently reflects a 98% probability that the central bank will hold rates steady.

Inflation Still a Wild Card

Although inflation showed signs of retreat in 2023, a 50 basis point rate cut in September 2024 was followed by a renewed uptick in price pressures, with inflation rising back to around 3%. Recent data shows it has eased slightly to 2.7%, but trade tensions and tariff-related uncertainty could keep inflation elevated in the near term.

Fed Chair Jerome Powell has repeatedly emphasized that ongoing tariff concerns are a key reason for the central bank’s cautious approach to easing.

Divisions Within the Fed

Consensus remains elusive inside the Fed itself. According to major U.S. financial outlets, figures like Christopher Waller and Michelle Bowman believe it’s time to begin cutting rates. Meanwhile, others argue that no reductions should take place at all throughout 2025.

The “dot plot” released in June reflected expectations for two rate cuts in 2025. However, no updated projections are expected during tonight’s meeting.

Political Tension: Powell vs. Trump

At 18:00 UTC, Fed Chair Powell will take the stage for his press conference—but interest isn’t limited to monetary policy. The restoration budget for the Fed’s headquarters has sparked controversy in Washington, and some speculate it could even jeopardize Powell’s leadership.

Last week, President Donald Trump visited the Fed building and publicly questioned the project’s cost. The tension between the two was noticeable during the visit, though it reportedly cooled off when Trump remarked, “All I really want from him is lower rates…”

Calm Before the Storm in the Markets

Markets remain unusually quiet in the lead-up to the announcement. Bitcoin is holding steady around $118,000, and volatility across digital assets has dropped significantly in recent days. U.S. Treasury yields are also little changed, reflecting market uncertainty about future rate directions and inflation trends.

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