Labor market is telling us we should continue cutting rates, says Fed Governor Chris Waller

Labor Market Analysis - The unemployment rate has increased to 4.6%, indicating a softening labor market with job growth returning in November after losses in October [1] - Recent job numbers have been revised down significantly, suggesting an average job growth of only 50,000 to 60,000 in the last couple of months, which may be further adjusted down by another 50,000 to 60,000 jobs [3][4] - The current state of the labor market is close to zero job growth, which is not considered healthy [4] Future Projections - There is an expectation for improvement in the labor market by 2026, driven by the resolution of tariff uncertainties and the impact of recent rate cuts [4] - The potential influence of AI on productivity and job dynamics remains uncertain, with companies hesitant to hire until they understand the implications of AI on their workforce [5][7] Inflation and Monetary Policy - Inflation is currently above target but is expected to decrease in the next three to four months, with inflation expectations remaining anchored around 2% [6] - The central bank's strategy includes continued rate cuts to support the labor market, as there are no indications of a resurgence in inflation [11][12] - The approach to rate cuts is described as moderate, with no need for dramatic actions unless the labor market deteriorates significantly [12]