Fed's Waller supports 25bps rate cut at October FOMC meeting, citing labor market weakness

Federal Reserve Governor Chris Waller said on Thursday that he supports a quarter‑point rate cut at the end of October, taking a more cautious line than some of his colleagues as the Federal Open Market Committee (FOMC) prepares for its meeting on October 28‑29.

Speaking at the Council on Foreign Relations, Waller told the audience:

“Based on all of the data we have on the labor market, I believe the FOMC should reduce the policy rate another 25 basis points at our meeting that concludes Oct. 29. But beyond that point, I will be looking for how the solid GDP data reconcile with the softening labor market.”

Waller’s statement came amid growing debate inside the Fed about how aggressively to ease policy. Stephen Miran, another Fed Governor, said he will again press for a half‑point reduction when the committee meets, arguing that a weak job market and rising geopolitical risks make a stronger move necessary.

Miran’s call proves rumored tension within the central bank between those urging faster cuts and those, like Waller, preferring to move gradually while inflation remains stubborn under President Donald Trump’s tariff‑driven price pressures.

Waller lays out scenarios as labor market weakens

In his speech, Fed’s Waller detailed two scenarios guiding his outlook. If GDP growth continues and employment rebounds, he said, the Fed must act carefully to avoid reigniting inflation. But if the economy deteriorates further, the central bank may have to reduce rates by as much as 1.25 percentage points.

“What I would want to avoid,” Waller said, “is rekindling inflationary pressure by moving too quickly and squandering the significant progress we have made taming inflation. The labor market has been sending some clear warnings lately, and we should be ready to act if those warnings are validated by what we learn in the coming weeks and months.”

Waller emphasized that he sees Trump’s tariffs as temporary price shocks, not long‑term inflation drivers. His position aligns with most of the FOMC, which has leaned toward smaller, incremental cuts this year rather than Miran’s larger proposals.

Despite disagreements, both governors agree more reductions are likely, though the scale remains uncertain.

The FOMC has faced what officials describe as a data dilemma, caught between soft hiring data and missing economic indicators due to the ongoing government shutdown, which has stalled key releases. That data blackout has made decisions harder as the Fed weighs whether economic weakness reflects a genuine slowdown or temporary noise.

Miran pushes for deeper cuts as shutdown clouds outlook

Speaking separately on Fox Business, Miran repeated that he believes the central bank should go further. “My view is that it should be 50 basis points,” he said. “However, I expect it to be an additional 25 and I think that we’re probably set up for three 25‑basis‑point cuts this year, for a total of 75 basis points this year.”

Miran’s push echoes his September stance, when he voted alone for a half‑point reduction and lost 11‑1 to the rest of the committee.

Miran said the lack of new data makes it difficult to judge how the economy is evolving. “It would be really helpful to have the economic data in order to be able to make the decisions we need to make,” hesaid. “Without those data, we still have to make a decision anyway, and so we’ll have to rely upon our forecasts for doing so.”

Miran added that growth “looks OK for most of this year,” but he’s worried about rising tensions between the United  States and China, which he believes strengthen the case for sharper easing.

Earlier in the week, Fed Chair Jerome Powell said the slowdown in hiring leaves the door open for more rate cuts. Participants from the September meeting projected two more reductions this year, while Miran continues to argue for a cumulative 1.25‑percentage‑point cut by the end of 2025.