Fed governor Waller, a finalist for chair, called for more but gradual rate cuts
Federal Reserve governor Christopher Waller, who expressed support for further interest rate cuts, has emerged as a candidate to succeed Jerome Powell as Fed chair. Sources confirmed he is one of five finalists under consideration by the Trump administration.
“I want to move towards cutting rates, but you’re not going to do it aggressively and fast, in case you make a big mistake on which way that things go,” Waller said in a CNBC interview.
“I’m still in the belief we need to cut rates, but we need to kind of be cautious about it.”
He pointed to a labor market that appears to be losing jobs, even as the gross domestic product (GDP) growth remains strong and inflation stays above the Fed’s 2% target.
“Something’s got to give. Either the labor market rebounds to match the GDP growth, or that GDP growth is going to pull back. So whichever way that goes, it’s got to affect what you do with policy,” Waller said.
Waller’s stance aligns with the Federal Open Market Committee’s recent decision to cut rates by a quarter percentage point, with signals of two more reductions likely before year-end. New York Federal Reserve president John Williams also indicated support for additional interest rate cuts this year.
“You can always adjust as you go as the data comes in,” he said. “If you went 75 [basis points] tomorrow, then you have a bit of a problem.”
His approach stands in contrast to new Fed governor Stephen Miran, who has advocated for a more aggressive pace, urging a 1.25 percentage point cut by year-end. On the other hand, Minneapolis Fed president Neel Kashkari warned that rapid cuts could reignite inflation and that mortgage rates may not fall even if the Fed acts.
Fed chair shortlist narrows
Waller is joined on the shortlist by Fed Vice Chair for Supervision Michelle Bowman, National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh, and BlackRock Fixed Income CIO Rick Rieder, according to senior Treasury officials who spoke to CNBC.
The field was trimmed from 11 candidates to five after a series of interviews—some lasting up to two hours—conducted by Bessent and his team. The selection process is expected to continue into the coming months, with a nomination possible by January.
Bowman is known for her regulatory expertise, while Hassett brings a background in economic policy from his time at the White House.
Warsh, a former Fed governor, is recognized for his crisis-era experience. Rieder, the only candidate without Fed experience, has drawn praise for his market insight and management at BlackRock.
Policy and independence in focus
The Trump administration’s open approach to the selection process and its vocal criticism of Fed policy have placed additional scrutiny on the central bank’s independence.
The administration’s recent moves, including the firing of Fed Governor Lisa Cook, which is currently tied up in the courts, have heightened industry concerns about the future direction of monetary policy.
Waller, for his part, emphasized that his interview with Bessent focused on policy, not politics. “It was actually a great interview. I mean, it was a lot of discussion about various aspects of the Fed, talking about various speeches I’ve given my points of view,” Waller said.
“I just thought it was great. I mean, really there was nothing political about it. It was all serious economic discussion.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
