Fed's Waller on board for an October cut, as Miran again presses for easing

Federal Reserve Governor Christopher Waller said recently he favors another interest rate cut at the US central bank's policy meeting later this month because of worrisome labour market developments , while a colleague again made the case for an even more aggressive path of cuts.

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"Based on all of the data we have on the labour market, I believe that the (Fed's policy committee) should reduce the policy rate another 25 basis points” at the end of October, Waller said in a speech given to a Council on Foreign Relations gathering in New York. What comes after that meeting, Waller said, depends on future data. He said as he weighs whether more rate cuts are needed, “I will be looking for how the solid GDP data reconcile with the softening labour market.”

Waller reiterated his view that trade tariffs are having a modest impact on inflation and that price pressures remain on track to hit the Fed’s 2% target. That outlook allows the central bank to focus policy deliberations on the job market, where there have been “some clear warning signs.” “The broad message of all the labour market data is one of weakening in demand, relative to supply, even with substantially lower net immigration and a decline in labour force participation this year,” Waller said. He added as the Fed navigates this month's meeting without major data due to the US government shutdown, private data are sending mixed signals about the state of hiring.