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Fed’s Waller Says Policy Still Restrictive, More Cuts Needed

(Bloomberg) -- Federal Reserve Governor Christopher Waller said he dissented from officials’ decision this week to hold interest rates steady because economic data are signaling additional cuts are needed.

“Monetary policy is still restricting economic activity, and economic data make it clear to me further easing is needed,” Waller said Friday in a statement.

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Fed officials voted this week to keep their benchmark policy rate in a range of 3.5%-3.75%, citing an improved outlook for the US economy. Waller opposed the decision, preferring a quarter-point cut instead.

The dissent reflects Waller’s view that fragility remains in the labor market. He noted the rise in the unemployment rate since the middle of last year, along with a slowdown in job growth. He said forthcoming data revisions will likely show there was no growth in payroll employment last year.

“I have heard in multiple outreach meetings of planned layoffs in 2026,” Waller said. “This indicates to me that there is considerable doubt about future employment growth and suggests that a substantial deterioration in the labor market is a significant risk.”

Waller for months has pointed to warning signs in the employment outlook, along with his benign inflation forecast, in advocating for rate cuts. But after the Fed lowered rates at three straight meetings to end 2025, Waller said there was no rush to deliver additional reductions, making his dissent this week somewhat surprising.

Waller explained his move by also saying that inflation — excluding the effects of President Donald Trump’s tariffs — is running near the Fed’s 2% objective.

(Updates with more from Waller’s statement.)