Federal Reserve chairman frontrunner Waller: There is a risk of a continued slowdown in employment, and the Fed should continue to cut interest rates in December.

On Friday local time, Federal Reserve Governor Christopher Waller stated that, given the risk of continued slowdown in employment, the Fed should continue to cut interest rates at its next meeting in December.

Waller said in a media interview on Friday: "Our biggest concern right now is the labor market. We know inflation will fall back, so I still advocate a rate cut in December because all the data suggests we should do so."

Previously, several Fed officials issued statements on Friday opposing this week's earlier decision to cut interest rates, citing continued risks of inflation. Waller’s remarks were made in this context. On Wednesday, the Federal Reserve lowered its benchmark interest rate by 0.25 percentage points for the second month in a row to respond to the sharp summer slowdown in the labor market.

Fed Chairman Powell warned in a press conference after the rate cut decision that whether rates will be cut again at the next meeting in December is by no means certain, far from it.

Waller downplayed the risk that President Trump's tariff policies might lead to rising inflation. He stated:

"If we exclude the possible temporary impact of tariffs that we estimate, the inflation rate—as measured by the Personal Consumption Expenditures Price Index (PCE) that we focus on—is about 2.5%. So yes, it hasn't reached 2%, but it isn't much higher either, and we expect it to fall."

Waller was appointed as a Fed governor by Trump in 2020. He is one of five candidates being considered by the White House for the position of Fed Chairman, as Powell's term will expire in May.

Earlier this year, Waller began advocating for rate cuts earlier than most of his colleagues—he believes tariffs only lead to a one-time increase in prices, and the Fed should prioritize employment risks—and in July voted against the majority decision to maintain interest rates.

Regarding his candidacy for Fed Chairman, Waller stated, "If the President needs me, I will not hesitate. He has asked me once before, and I agreed. If he asks again, I will agree."

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