Fed Governor Waller says inflation softening faster than he expected put him in half-point-cut camp

Federal Reserve Governor Christopher Waller supported a half percentage point rate cut at this week’s meeting due to inflation falling faster than expected. Recent data showed core inflation below 1.8%, below the Fed’s 2% target. Waller stated that the softer inflation trend gives the Fed space to ease more to support the labor market. The Fed’s decision to cut by 50 basis points brought the borrowing rate down to 4.75%-5% with potential for more cuts this year and in 2025. Waller emphasized the importance of responding to economic data to maintain the Fed’s credibility in keeping inflation close to the target. The Fed will review more inflation data next week to inform future decisions.