Federal Reserve Governor Christopher Waller has broken ranks with the cautious majority of central bank officials, stating in a CNBC interview that a rate cut could, and should, happen as soon as July. “If you’re starting to worry about the downside risk [to the] labor market, move now, don’t wait,” Waller told CNBC’s Steve Liesman. He stressed that inflation is no longer a major concern, and tariffs aren’t likely to reignite it. According to Waller, waiting for a crash before taking action would be a mistake.
Markets React to Fed Shift
Following Waller’s appearance, stock market futures ticked upward, showing optimism that cheaper borrowing may be on the horizon. But while investors cheered, it remained unclear whether Waller’s view would win over a majority of the Federal Open Market Committee (FOMC), which recently voted unanimously to hold rates steady at 4.25%–4.5%. That marked the fourth straight pause since the last rate cut in December.
San Francisco Fed Says ‘Not So Fast’
On the same day, San Francisco Fed President Mary Daly offered a cooler take. In a separate CNBC interview, Daly said she prefers to wait until fall to decide on any rate adjustments. She argued that more time is needed to understand how new tariffs might affect inflation and business sentiment. Daly doesn’t vote on rate decisions this year, but her voice still carries weight. “Unless we saw a faltering in the labor market that was meaningful,” she said, “then I would say the fall looks more appropriate to me.”
Snider and Van Metre: July Cut Is Inevitable
Over at Eurodollar University, monetary experts Jeffrey Snider and Steve Van Metre weren’t mincing words. “The Federal Reserve is going to cut rates in July,” Snider declared flatly. Both analysts emphasized that conditions are already deteriorating, especially in the labor market, and the Fed is behind the curve. They pointed to regional Fed surveys like the Philadelphia Fed’s, which showed both hours worked and job creation turning negative. “Businesses said, ‘Hey, we’ve got to cut both,’” Van Metre noted. That’s not a soft patch – that’s a signal of contraction.
Labor Market Weakness Hiding in Plain Sight
Van Metre and Snider also highlighted that companies are getting squeezed from both sides: costs are rising, but consumer demand is fading fast. Retailers like Walmart and Target have admitted they can’t pass higher costs onto customers, who simply can’t afford it. “Volume just disappears,” Snider said, explaining why the Fed’s past inflation fears never materialized. If businesses can’t raise prices, they cut elsewhere – usually payroll. Waller echoed this, noting that the labor market’s strength might be more fragile than previously believed.
Waller’s Warnings Echo 2023’s Mistakes
Interestingly, Waller’s current urgency is drawing comparisons to the Fed’s missteps in 2023, when officials waited too long to act and had to scramble with large cuts later. “We’ve been on pause for six months, thinking that there was going to be a big tariff shock to inflation. We haven’t seen it,” Waller said. He argued that the data doesn’t support waiting anymore. Snider believes Waller’s remarks are designed to “get out in front” of worsening conditions before the Fed ends up looking unprepared again.
Trump Pressures Fed, But Waller Denies Political Influence
Former President Donald Trump, who nominated Waller, has been calling for deeper rate cuts – up to 2.5 percentage points below current levels. Though Waller insists his push for cuts isn’t political, his comments come amid speculation that he could be in line to replace Jerome Powell as Fed Chair when his term ends in 2026. Regardless, Trump has been sharply critical of Powell, calling him “stupid” for not cutting sooner.
The Real Danger: Delaying Cuts Too Long
Van Metre raised a chilling point: if the Fed waits until September and things unravel before then, the required rate cuts may have to be larger and more disruptive. That would trigger fear in both Wall Street and the real economy. “You can’t do that if the unemployment rate soars over the next three months,” he warned. A smaller cut now could look measured. A big one later could look like panic. And panic tends to cause more damage than it prevents.
Other Central Banks Are Already Cutting
Adding to the urgency is the fact that many central banks around the world have already started cutting rates. The Swiss National Bank is back to zero. Australia is considering aggressive cuts. The European Central Bank is loosening too. Snider noted that the Fed risks looking tone-deaf if it continues to hold while other global institutions are signaling alarm. “The situation’s getting worse,” he said. “And the Fed needs to wake up to that.”
They Should Have Cut Yesterday
Here’s where I’ll jump in with some commentary. Waller’s not just suggesting a shift – he’s warning of a storm on the horizon. And he’s right. The signs are everywhere if you’re paying attention. Youth unemployment, falling hours worked, companies freezing hires – it’s all adding up. Waiting until fall isn’t just cautious. It’s reckless. Rate cuts don’t act instantly. They need time to ripple through the economy. If you know a slowdown is coming, you don’t wait for it to arrive – you get out the umbrella while the skies are still gray.
Waller Highlights Risk to New Workers
One striking detail came from Waller’s mention that recent graduates can’t find jobs. That’s not just a red flag. It’s a signal flare. When young people can’t break into the workforce, the long-term effects are massive: lower lifetime earnings, delayed families, rising debt, and more political instability. If Waller’s seeing that already, the Fed has a duty to act. Eurodollar University emphasized this exact point: symptoms of a sick labor market are already here, even if the broader data hasn’t caught up yet.
No Inflation Spike Means No Excuse Left
The bottom line, according to both Snider and Waller, is that inflation just isn’t doing what the Fed thought it would. The feared price spike from Trump’s tariffs never happened. In fact, businesses are eating the costs rather than passing them along. That removes the last major reason for holding off on cuts. As Snider put it, “If you eliminate tariffs as a threat, there’s really no reason not to cut.” The Fed can’t blame inflation anymore. They can only be judged by how they respond to a weakening economy.
The Clock Is Ticking
If there’s a consensus forming, it’s this: the longer the Fed waits, the more they risk losing control of the narrative – and the economy. Waller has emerged as the lone voice pushing for action, while officials like Daly urge patience. But patience has a price, and signs suggest we’re already paying it. As Snider and Van Metre warned, when the cuts finally come, they might come too late to avoid damage. July may be the last off-ramp before the road gets rocky. Let’s see if the Fed takes it.
Gary’s love for adventure and preparedness stems from his background as a former Army medic. Having served in remote locations around the world, he knows the importance of being ready for any situation, whether in the wilderness or urban environments. Gary’s practical medical expertise blends with his passion for outdoor survival, making him an expert in both emergency medical care and rugged, off-the-grid living. He writes to equip readers with the skills needed to stay safe and resilient in any scenario.