Fed Governor Waller sees more rate cuts but says central bank needs to be 'cautious about it'

Monetary Policy Stance - The speaker believes that cutting rates is still necessary, but caution is warranted due to conflicting signals from the labor market and GDP growth [1] - The market has already priced in sequential rate cuts through the end of the year, which the speaker considers cautious enough if implemented in quarter-point increments [3] - A more aggressive rate cut, such as 75 basis points, carries a higher risk if the economic outlook is misjudged [4] - Gradual adjustments of 25 basis points allow for flexibility as new data becomes available [4] Economic Indicators - The labor market is weak, but GDP growth is strong, with forecasts near 4% [1] - Negative job growth is inconsistent with 4% GDP growth, suggesting an imbalance that needs to be resolved [1] - The labor market and GDP growth must align, either through a labor market rebound or a GDP growth slowdown [2] Policy Implications - If the labor market rebounds and growth remains strong, there is less need for rate cuts [2] - If GDP growth slows down, the labor market situation necessitates further rate cuts [2] - Policy decisions should be made cautiously to avoid significant errors in either direction [3]