Federal Reserve Governor Christopher Waller has called for a 25 basis point interest rate cut at the upcoming July 29-30 policy meeting, diverging from Chair Jerome Powell's stance, citing the need to support economic growth amid signs of slowing momentum.

Recent labor market data shows robust job growth with 147,000 jobs added in June and unemployment falling to 4.1%, which complicates the case for immediate rate cuts.

Despite ongoing growth, Waller notes that economic momentum has decelerated considerably, increasing the risk of weakening employment conditions.

Waller highlights that tariffs have caused only a temporary increase in inflation, and policymakers should focus on underlying inflation trends rather than short-term price boosts.

Support for rate cuts is echoed by other Trump appointees like Michelle Bowman and Kevin Warsh, who criticize Powell’s cautious approach amid political pressure.

Waller is considered a potential successor to Powell, whose term ends in May 2026, and has previously faced speculation and threats from Trump about his job security.

Waller emphasizes that while the economy is still growing, its momentum has significantly slowed, posing risks to maximum employment, and advocates for proactive rate cuts to prevent deterioration.

He argues that inflation, temporarily lifted by trade tariffs, should not influence long-term policy decisions, as broader inflation trends are approaching the 2% target.

He stresses the importance of acting now with rate cuts to preserve the labor market’s strength, warning that waiting for signs of deterioration could be too late.

Waller points to signs of economic weakening, such as slowing consumer spending and cooling job gains, as reasons to lower borrowing costs to support growth.

He advocates for adjusting monetary policy toward a neutral stance rather than maintaining a restrictive position, given the current economic signals.

Inflation data showing a 2.7% increase in consumer prices in June, the fastest in four months, adds complexity to the Fed’s decision-making regarding rate cuts.