The Dow Jones (DJIA) is trading in negative territory after Fed Governor Christopher Waller reiterated his call for a rate cut during the September 16-17 Federal Open Market Committee (FOMC) meeting in order to support a soft labor market.
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“I’ve been clear that I think we should be cutting by the next meeting,” Waller said in an interview with CNBC on Tuesday, adding that the Fed should lower rates before the labor market weakens even further, “because usually when the labor market turns bad, it turns fast in a nonlinear fashion, it doesn’t just kind of creep up.”
Fed’s Musalem Echoes Waller’s Labor Market Concerns
St. Louis Federal Reserve President Alberto Musalem warned that a slow hiring environment paired with an increase in layoffs could spell trouble. “While I am not hearing from businesses about an imminent increase in layoffs, real GDP growth that is somewhat below potential and profit margin pressures related to tariffs could contribute to such an outcome,” Musalem said in a speech at the Peterson Institute.
A 25-bps rate cut this month is the most likely outcome with 91.7% odds, according to CME’s FedWatch tool.
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