Fed Governor Chris Waller: Still believe we need to cut rates, but need to be 'cautious about it'

Core Insights - Fed Governor Chris Waller discussed the challenges of making policy decisions without complete economic data, emphasizing the importance of private sector data to gauge the labor market's health [3][4][5][6][10] Economic Data and Labor Market - Waller noted that while government data is delayed, private sector indicators suggest a weak labor market, with job growth potentially negative in recent months [6][7][14] - Anecdotal evidence from businesses indicates a lack of hiring plans, with many companies not backfilling positions or making new hires [8][14] - The labor market's weakness is a primary concern for policy decisions, as it does not align with GDP growth forecasts, which are close to 4% [20][21] Inflation and Tariffs - Waller expressed that tariff effects are one-time price increases and do not lead to persistent inflation, aligning with historical central bank views [12][13] - He highlighted a two-tier effect in the market where higher-income consumers are more likely to absorb tariff costs, while lower-income consumers are more price-sensitive [18][19] Policy Direction - Waller advocates for cautious rate cuts, suggesting that the Fed should adjust its approach based on incoming data regarding the labor market and GDP growth [20][22] - The market anticipates sequential rate cuts, but Waller emphasizes a measured approach to avoid potential policy missteps [22][23] Private Credit Market - Waller addressed concerns about the private credit market, indicating that it is less risky due to the significant equity positions involved, which provide a buffer against defaults [24][25] - He noted that while losses may occur, it is part of the capitalist system, and it is not the Fed's role to protect individual wealth [26]