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A top Federal Reserve official has called for a December interest rate cut, highlighting divisions among policymakers over whether to prioritise fighting inflation over supporting a weakening jobs market.
Christopher Waller, a Fed governor who has emerged as the leading internal candidate to replace Jay Powell as chair, said on Monday in London that his “reading of the data” led him to “support a cut” at the US central bank’s December 10 vote “as a matter of risk management”.
The Fed has cut borrowing costs by a quarter point at its previous two policy votes, amid signs that the US jobs market had weakened over the course of the summer.
Waller said the labour market was “still weak and near stall speed”, while inflation in September showed “relatively small effects from tariffs” — with expectations of what happens next for prices still “well anchored”.
However, the Fed governor’s remarks contrast with other members of the central bank’s rate-setting Federal Open Market Committee.
Hawks, such as regional Fed presidents Susan Collins, Jeff Schmid and governor Michael Barr, say inflation — at 3 per cent — is still too high, while growth has remained unexpectedly resilient.
Waller countered that, even excluding the temporary effects of the shutdown in clamping down on spending, growth had “likely slowed in the second half of 2025 from its fast pace in the second quarter”.
Powell said after the Fed’s late October cut that another lowering in December was far from a “foregone conclusion”.
Philip Jefferson, the Fed’s vice-chair for monetary policy, earlier on Monday signalled that there was still room for the central bank to cut rates as labour market risks were still “skewed to the downside”.
However, he added that a dearth of official data and changes in the balance of risks to inflation and jobs underscored “the need to proceed slowly”.
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