Federal Reserve Governor Christopher Waller said Monday that interest rate cuts remain possible later this year, even as President Donald Trump’s tariffs add near-term price pressures.
Speaking at a conference in Seoul, Waller said the central bank would look past any temporary inflation caused by Trump’s import taxes, emphasizing that “underlying inflation continues to make progress” toward the Fed’s 2% target.
“If tariffs settle in the lower end of the range of possibilities and underlying inflation improves, I would support ‘good news’ rate cuts later this year,” Waller said. “Fortunately, the strong labor market and progress on inflation through April gives me additional time to see how trade negotiations play out and the economy evolves.”
The Fed has kept its benchmark federal funds rate steady at 4.25%-4.5% since December. Markets are pricing in about a 75% chance of a rate cut by September, though Waller cautioned against assuming any immediate move.
Waller’s comments come as economists debate the economic impact of Trump’s tariff hikes, which have raised concerns about higher unemployment, slower growth and lingering inflation. While some see the tariffs adding to price pressures, many believe the effect will be temporary and not enough to derail the Fed’s policy path.
The tariffs face legal challenges in U.S. courts, adding to uncertainty. Waller noted that even if tariffs temporarily push up prices, the Fed would keep its focus on broader economic and labor market trends when deciding on future moves.
