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

Labor Market Assessment - The labor market is currently soft, with recent job growth averaging around 50,000 to 60,000 jobs per month [3] - This level of job growth is considered too high and likely to be revised downwards based on unemployment insurance administrative data, potentially nearing zero job growth [3][4] - Uncertainty surrounding AI is causing companies to delay hiring decisions, impacting the labor market [7] Monetary Policy and Inflation - Preemptive rate cuts initiated in September were intended to soften the economic impact of tariff uncertainty [4] - The speaker is not particularly worried about inflation, believing it will come down in the next three to four months [5][6] - Inflation expectations are well-anchored around 2% based on market pricing and TIPS [6] - The speaker advocates for continued rate cuts, viewing inflation as under control and the labor market as needing support [11] - A moderate pace of rate cuts is preferred, as dramatic action suggests waiting too long [12] Future Outlook - 2026 could be a better year due to the resolution of tariff uncertainty and potential productivity gains from AI [4][5] - The effects of tariffs are considered a one-time price effect, not expected to cause persistent inflation [10]