Christopher J. Waller
Governor, Federal Reserve
Score
-0.75
Confidence
High (0.95)
Change
— first appearance
Analysis
Governor Waller adopts a dovish stance centered on a significant labor market deterioration that warrants further policy easing despite elevated headline inflation. He argues that monetary policy remains restrictively tight relative to neutral and that near-zero payroll growth in 2025—versus a decade average of 1.9 million jobs annually—signals weakness in labor demand that justifies rate cuts, particularly given that core inflation excluding tariff effects is already close to the 2 percent target with anchored expectations. By dismissing temporary tariff-driven inflation as something to "look through," Waller prioritizes the Fed's dual mandate objective on employment, positioning additional rate cuts as necessary to prevent a "substantial deterioration" in labor market conditions.
Key Passages
"Three cuts to the policy rate last year have moved it closer to a neutral setting but monetary policy is still restricting economic activity, and economic data make it clear to me further easing is needed."
"Inflation excluding tariff effects is running close to the FOMC's 2 percent target and on a path to sustainably reach that goal."
"With total inflation excluding tariff effects close to our target at just slightly above 2 percent and a weak labor market, the policy rate should be closer to neutral, which the median FOMC participant estimates is 3 percent, and not where we are–50 to 75 basis points above 3 percent."
"Compared to the prior ten-year average of about 1.9 million jobs created per year, payrolls increased just under 600,000 for 2025."