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

Monetary Policy & Economic Data - The Fed is closely monitoring private sector data to compensate for potential government data delays, but acknowledges it may not be fully representative [4][5] - The Fed considers the labor market weakness as a key factor in policy decisions, with concerns about negative job growth [6][7] - The Fed acknowledges the importance of CPI data for assessing inflation, especially regarding colleagues' concerns [10][11] - The Fed views tariff effects as one-off events and focuses more on the labor market when setting policy [12][14] Labor Market Assessment - The labor market is considered weak, with negative job growth and a lack of hiring plans reported anecdotally [6][7][8] - There is no evidence of a tight labor market, with no wage increases or rising vacancies [15][16] Inflation & Tariffs - Tariff effects are seen as one-time price increases, not causing persistent inflation, consistent with central bank's long-standing view [12][13] - Businesses are passing tariffs through to higher-income consumers but not to lower-income consumers [18][19] - There's an estimated 40% pass-through of tariffs to prices, showing a correlation between tariff size and price changes [19] Future Policy Direction - The Fed is leaning towards cutting rates but cautiously, considering the divergence between a weak labor market and strong GDP growth (close to 4%) [20][22] - The Fed prefers a gradual approach to rate cuts (quarter point) to allow for adjustments based on incoming data [23] Private Credit Market - The Fed does not view the private credit market as a significant systemic risk due to the substantial equity positions involved [24][25]