Federal Reserve Governor Christopher Waller signaled in an interview with CNBC that the US central bank could be ready to lower interest rates as early as July 2025. This potential rate cut depends on how inflation and the labor market develop.
Inflation and Labor Market as Key Indicators
Waller emphasized that a rate cut in 2025 is among the options, provided that inflation continues to decrease and the labor market remains robust. The Fed last left the key interest rate at 4.25 to 4.50 percent and is waiting for further clarity on the impacts of tariff and other policy measures on prices and employment.
Optimistic Forecasts Regarding Tariffs
Waller also expressed optimism regarding a calming of tariff issues, which could be a prerequisite for rate cuts in the second half of the year. He stated that if it is possible to reduce import tariffs to around ten percent and this situation is resolved by July, it would create a favorable environment for rate cuts.
Market analyses confirm this assessment: The likelihood of a Fed rate cut in late summer (June/July) is increasingly being priced in by the market. Waller’s announcement could have significant implications for financial markets. A rate cut would tend to favor riskier assets such as stocks or cryptocurrencies and could also stimulate the overall economic environment.
Overall, everything points to the Fed potentially loosening its monetary policy orientation soon in light of declining inflation rates and stable economic data.