Fed’s Waller: Labor market remains weak

Federal Reserve (Fed) board of governors member Christopher Waller said that he dissented in favor of a 25bps interest rate cut because monetary policy is still restricting the economic activity too much in a statement released on Friday.

Key takeaways

Dissented in favor of 25-basis point cut at last meeting because policy is still restricting activity too much.

Labor market remains weak despite solid economic growth.

Labor market does not look remotely healthy, and while supply was a factor, demand is weak.

Inflation is elevated from tariffs but monetary policy should look through those effects given anchored expectations.

Expects weak job numbers from last year to be revised lower to reflect virtually no growth in payroll employment in 2025.

Policy should be closer to neutral, perhaps around 3% vs current rate range of 3.50% to 3.75%.

Heard of multiple layoffs planned for 2026 with considerable doubt about job growth and significant risk of a substantial deterioration.

Inflation excluding tariffs is near fed's 2% goal and on path to reach it.”