Federal Reserve Governor Christopher Waller indicated that the central bank could begin cutting interest rates as early as July 2025, provided inflation continues to ease and economic data remains favorable. In a CNBC “Squawk Box” interview on June 20, 2025, Waller stated that he does not expect tariffs proposed by the Trump administration to significantly impact inflation, suggesting policymakers should move cautiously but could start easing rates soon, as inflation is no longer a major threat. He emphasized that the current federal funds rate range of 4.25%–4.5% allows room for cuts without risking economic overheating, though he noted uncertainty about whether the Federal Open Market Committee (FOMC) would align with his view.
Waller’s comments align with his earlier statements in 2025, where he expressed optimism about inflation trending toward the Fed’s 2% target, citing a December 2024 core CPI reading of 3.2% and anticipating further declines. He suggested that tariff-related price pressures would likely be transitory, not warranting a pause in rate cuts unless inflation unexpectedly spikes. Market reactions on X showed equities rising and money market yields dipping, though Fed futures priced only a 10% chance of a July cut, indicating skepticism about immediate action.
The FOMC, which held rates steady in its June 18–19, 2025, meeting, is expected to maintain the current range at the upcoming July 29–30 meeting, with Waller’s remarks shifting some market expectations toward two potential cuts in 2025, possibly starting in July if data supports. However, he cautioned that risks to employment and economic activity from tariffs could influence the timing, advocating a data-driven approach over speculative policy concerns.