After officially dissenting at the last Fed meeting, Waller makes his stance known two weeks before rate announcement
With two weeks remaining until the Federal Reserve announces its latest rate decision, one Fed governor is making sure everyone knows his feelings haven’t changed since the last meeting.
Governor Christopher Waller, who was one of two Fed governors to file an official dissent at the last meeting, told CNBC on Wednesday that he believes it’s time for the central bank to enter a rate-cutting cycle.
“When the labor market turns bad, it turns bad fast ... So for me, I think we need to start cutting rates at the next meeting,” Waller said in an interview on CNBC’s Squawk Box. “We don’t have to go into a lock sequence of steps. We can kind of see where things are going because people are still worried about tariff inflation. I’m not, but everybody else is.”
He said that a rate cut in September should be the start, and that the central bank’s benchmark rate is 1% to 1.5% above what he would consider neutral.
CME FedWatch, which tracks the probability of Fed rate movement based on the 30-Day Fed Funds futures prices, places the odds of a 25-basis-point cut at 95.6% as of Wednesday morning. The index now favors a cut at the October meeting as well, and is projecting four additional cuts in 2026.
Not just Waller
What is leading markets to increase the odds of Fed rate cuts is other members of the Federal Open Market Committee (FOMC) coming out in favor of reductions.
St. Louis Federal Reserve president Alberto Musalem, speaking at the Peterson Institute in Washington, DC, on Wednesday, seemed less concerned about inflation than in previous statements.
He said tariffs would work their way through the economy over the next two or three quarters, then the “impact on inflation will fade after that.”
Atlanta Fed president Raphael Bostic called the Fed’s current policy “marginally restrictive.” He wrote on the Atlanta Fed website that he believed a single 25-basis-point cut would be appropriate, but that could change based on economic conditions.
“I believe that, while price stability remains the primary concern, the labor market is slowing enough that some easing in policy—probably on the order of 25 basis points—will be appropriate over the remainder of this year,” Bostic wrote. “That could change, depending on the trajectory of inflation and the evolution of employment markets in the coming months. I am and remain, after all, data dependent.
Miran hearing
Another potential factor in Fed policy is the addition of Stephen Miran to the Fed board. The Senate Banking Committee is set to hold a confirmation hearing for Miran on Thursday.
While the current plan is for him to assume the rest of the term vacated by Adriana Kugler’s resignation, if Trump is able to fire Lisa Cook successfully, he suggested that Miran might take her place instead. Cook’s term is set to run until 2038.
Federal Reserve governor Lisa Cook's legal battle against president Donald Trump’s attempt to remove her from office has set up a potential Supreme Court case that could determine the central bank’s independence. https://t.co/pwTMHh2IXf
— Mortgage Professional America Magazine (@MPAMagazineUS) September 3, 2025
While Democrats are expected to grill Miran on the potential loss of Fed independence, without a committee majority, there isn’t much they can do to stop his confirmation, unless Republicans join them to reject his approval.
Democrat Elizabeth Warren promised to ask tough questions of Miran, whom she called “a Trump loyalist and one of the chief architects of President Trump’s chaotic tariff policy that has hurt Americans’ wallets and our economy.”
It is expected that if Trump can gain control of the central bank, there would be a series of aggressive rate cuts, which some economists warn could cause inflation to spike.
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