Fed’s Waller Says Central Bank ‘Needs To Start Cutting Rates This Month’, Warns Labor Market Could Turn Bad Fast: Report

In an interview with CNBC, Waller expressed his concerns about a slowdown in the jobs market, saying that usually “when the labor market turns bad, it turns bad fast.”

Federal Reserve Governor Christopher Waller reportedly backed interest rate cuts starting in September, ahead of the crucial Federal Open Market Committee’s (FOMC) meeting scheduled for September 16-17.

In an interview with CNBC, Waller expressed his concerns about a slowdown in the jobs market, saying that usually “when the labor market turns bad, it turns bad fast.”

Waller also backed the possibility of multiple interest rate cuts in the coming months, adding that the Fed could tweak the pace and quantum based on new data. “I would say over the next three or six months, we could see multiple cuts coming in. Whether it’s like every other meeting, every meeting, we’ll have to wait and see [what] the data says,” Waller said, according to the report.

Data from the CME FedWatch tool points to a 95.6% probability of the Fed cutting interest rates by 25 basis points in September.

Waller was one of the two Fed Governors to dissent from the central bank’s decision to keep interest rates unchanged after the July FOMC meeting. He called the Fed’s approach “extremely cautious” and said it could result in the monetary policy falling behind the curve.

Waller added that the Fed’s current benchmark rates of 4.25% to 4.5% are above the neutral level. “We kind of know we want to get toward neutral. We know roughly how much you might want to cut — say 100, 150 basis points. But how fast we get there is going to depend on the data that comes in,” he said in the interview.

Meanwhile, U.S. equities gained in Wednesday’s opening trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up  0.29%, while the Invesco QQQ Trust (QQQ) gained 0.6%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bullish’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.39% at the time of writing.

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