WASHINGTON — Federal Reserve Governor Christopher J. Waller said he dissented at the most recent Federal Open Market Committee meeting after concluding a 25-basis-point rate cut was warranted, arguing monetary policy remains restrictive amid a weakening labor market.
Waller, in a statement issued Friday, said job growth in 2025 was sharply below historical norms, with payroll gains far under the prior decade’s annual average. He noted unemployment has risen since mid-2025 and warned that hiring remains subdued, with employers cautious about expanding headcount. Based on outreach with businesses, Waller said some firms are planning layoffs in 2026, raising the risk of further labor-market deterioration.
For financial institutions, Waller’s remarks signal growing internal Fed pressure toward easing, potentially lowering funding costs and supporting loan demand if rate cuts materialize. He framed current conditions as misaligned with a restrictive policy stance given slowing employment momentum.
On inflation, Waller said price pressures tied to tariff effects should be “looked through” if inflation expectations remain stable, which he argued they are. Excluding tariff impacts, he said inflation appears near the Fed’s 2% target and on a sustainable path.
Waller added that the policy rate remains 50 to 75 basis points above the Fed’s estimated neutral level, which he placed around 3%. He said lowering rates would help support employment and reduce the risk of a sharper economic slowdown that could be harder to reverse later.