Federal Reserve Waller Q&A now:
Federal Reserve Governor Christopher Waller continued his heavy run of commentary, warning that labour-market weakness remains the dominant concern and reinforcing his case for further policy easing. He said that if the job market were to show a meaningful rebound, the need for additional “insurance” cuts would diminish — but current signals are heading the other way. Soft-data channels, he noted, are showing growing plans for layoffs, while firms report that lower- and middle-income households have pulled back on spending, weighing on hiring. Some businesses are also funding AI investment by freezing recruitment.
On the balance sheet, Waller said the Fed is “pretty much spot on” with current levels, but rising market rates suggest reserves are nearing scarce territory. He expects natural demand for reserves to push the balance sheet higher again and said the Fed could be just “a month or a couple of months” away from needing to grow it.
Waller stressed that policymakers should focus more on the weakening labour market than on the mild inflation overshoot and reiterated that a single 25bp cut wouldn’t be enough to restore the strong job growth seen previously. He declined to comment on whether President Trump’s public rate commentary helps or hinders the Fed.
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Earlier: