US Fed Rate Outlook: Possible Rate Cut in July
Governor Waller Shows Flexibility Amid Global Uncertainty
A US Federal Reserve official suggested a possible rate cut next month. This shows flexibility due to global economic uncertainty and rising geopolitical risks.
Key Points from Governor Waller’s Interview
- Rate cuts could begin in July.
- The Fed is prepared to pause if a major shock happens, like from the Middle East conflict.
- These remarks follow the Fed’s decision to keep interest rates unchanged.
Federal Open Market Committee (FOMC) Decision
The FOMC kept the benchmark interest rate the same. This is the fourth time in a row that rates have stayed between 4.25% and 4.50%. President Donald Trump has repeatedly asked the Fed to cut rates. However, Chair Jerome Powell said the central bank would act carefully.
Waller’s View on Rate Cuts
Governor Waller believes in starting the rate cut process slowly. He thinks central banks should focus on underlying price trends, not temporary tariff effects. Waller sees tariff impacts as a “one-time effect” that shouldn’t cause lasting inflation.
Split Among Fed Policymakers
Waller’s comments show a growing split among Fed policymakers. While Powell suggests waiting for more information before changing policy, Waller is more open to starting the rate cut process.
Response to Trump’s Suggestion
Waller disagreed with Trump’s recent idea that rate cuts could lower debt-servicing costs. He stressed that the Fed’s job from Congress is to focus on unemployment and price stability, not on giving cheap financing to the US government.
