Fed Governor Waller Defies Chair Powell, Urges July Rate Cuts/ Newslooks/ WASHINGTON/ J. Mansour/ Federal Reserve Governor Christopher Waller says the central bank should lower interest rates this month to counter a slowing economy. His remarks contrast sharply with Fed Chair Jerome Powell’s wait-and-see approach amid White House criticism. Waller argues that Trump’s tariffs will have only a minor inflationary impact and should not delay monetary easing.
Fed Rate Debate Quick Looks
- Waller’s Stance: Calls for rate cut at July Fed meeting due to slowing growth
- Economic Warning: Consumer spending and job gains showing signs of weakness
- Tariff Outlook: Waller says inflation from tariffs is minor and temporary
- Powell’s Position: Urges caution, waiting to assess impact of tariffs
- Inflation Data: Core inflation nearing the Fed’s 2% goal; June CPI up 2.7%
- Trump’s Influence: Waller, Bowman, and Warsh back rate cuts; Powell under pressure
- Fed Minutes Insight: Only a few members backed a July cut at last meeting
- Leadership Speculation: Waller seen as potential Powell successor if Trump replaces chair
Fed Governor Waller Defies Chair Powell, Urges July Rate Cuts
Deep Look
WASHINGTON, D.C. — Federal Reserve Governor Christopher Waller broke ranks with Fed Chair Jerome Powell on Thursday, saying the central bank should cut its benchmark interest rate later this month to prevent further economic slowdown. Speaking in New York City, Waller cited sluggish consumer spending, cooling job gains, and rising risks to employment as key reasons the Fed must act now to support growth.
“The economy is still growing, but its momentum has slowed significantly,” Waller said. “We must act before that impacts the labor market.”
His comments add fuel to a growing policy divide inside the Fed’s board, where Trump-appointed members like Michelle Bowman have also voiced support for immediate rate cuts. Meanwhile, Chair Powell has resisted pressure, drawing criticism from the White House and some economic commentators aligned with President Donald Trump.
A Case for Easing
Waller emphasized that underlying inflation is now close to the Fed’s long-standing 2% target, suggesting there is room to reduce rates without reigniting inflation concerns.
Although the June Consumer Price Index (CPI) showed a 2.7% year-over-year increase, Waller argued that most of this can be attributed to Trump’s tariff hikes, which he said would have only short-term price effects.
“Tariffs have boosted inflation slightly, but that doesn’t warrant delay,” he said. “We should focus on the core trend, not temporary distortions.”
Fed Politics and Powell’s Future
Waller’s public statement marks the most explicit divergence yet from Powell by a senior Fed official and comes at a time when Trump is openly dissatisfied with Powell’s leadership. The president has threatened to fire Powell, though he walked back those comments on Wednesday, calling such a move “highly unlikely.”
Still, political insiders see Waller as a top contender to replace Powell when his term ends in May 2026, or earlier if Trump follows through with a dramatic leadership shake-up.
“Waller is aligning closely with Trump’s economic vision,” said one former Fed official. “That’s not accidental.”
Fed Meeting Notes: Split Views
According to minutes from the Fed’s June 17–18 meeting, only a “couple” of the 19-member Federal Open Market Committee (FOMC) supported a July rate cut. Several others urged holding rates steady, noting that headline inflation still exceeds the 2% target.
Even so, political pressure is mounting, and with slowing growth signals appearing in key sectors like retail, labor, and industrial output, the push to cut rates may gain traction before the Fed’s next meeting.
Warsh Joins the Chorus
Kevin Warsh, a former Fed board member and current Hoover Institution fellow, also weighed in this week, saying on Fox News that he supports immediate rate cuts and endorsed Trump’s frustration with Powell.
“The president’s right to be frustrated,” Warsh said. “The Fed needs to be more proactive.”
Warsh, along with Waller and Bowman, represents a growing bloc of Fed voices who believe monetary easing is essential to cushioning the economy against global headwinds and domestic policy shocks.
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