Christopher Waller, a member of the Federal Reserve Board of Governors and the leading candidate to succeed Jerome Powell as chairman in 2026, stated that the time has come to begin a cycle of interest rate cuts, noting that the central bank has sufficient flexibility to determine the pace of this path based on economic data.

In an interview with CNBC, Waller said, “When the labor market deteriorates, it does so quickly, and that’s why I believe we should start cutting rates at the next meeting. We don’t have to enter a strict sequential path; we can monitor developments and decide our steps, although some remain concerned about tariff inflation. For me, I am not worried, but others still are.”

Waller is one of the prominent names on former U.S. President Donald Trump’s list to lead the Federal Reserve after Powell’s term ends.

He was one of only two governors on the board who opposed the Federal Open Market Committee’s decision last July to keep the benchmark interest rate in the range of 4.25% to 4.5%.

This was the first time in over 30 years that two governors officially dissented on a committee decision.

Above Neutral Level

Waller pointed out that current interest rates are about 1 to 1.5 percentage points above the “neutral” level, adding, “Over the next three to six months, we may see several cuts. It could be at every meeting or every other meeting, and we will wait to see what the data says.”

Although he acknowledged that tariffs act as a “tax on consumers” that may slow economic growth, Waller said he does not expect a recession in the U.S. economy under current forecasts.

The next Federal Reserve monetary policy meeting is scheduled for September 16-17.

Separately, Waller declined to comment on Trump’s attempt to remove fellow board member Lisa Cook but emphasized that the Fed’s independence remains “essential.”

He added, “The Fed’s independence is critical to everything we do. There are concerning developments, but I still believe we have an independent central bank, and those appointed to the board will act professionally and stay away from politics.”

(Agencies)