Fed's Waller (voter) explains dissent: concluded that cutting by 25bps was the appropriate course of action; views have not changed since the July 17th speech.

"In a speech I gave July 17, I laid out the case for cutting the policy rate at the July FOMC meeting and my views have not changed since then"

• 1: Tariffs are a one-off increase in the price level, do not cause inflation beyond a temporary increase. "Standard central banking practice is to "look through" such price-level effects as long as inflation expectations are anchored, which they are."


• 2: A "host" of data argues that monetary policy should now be close to neutral, not restrictive. Data imply the policy rate should be around neutral, which the median FOMC participant estimates is 3%, and not where we are, 1.25 to 1.50 percentage points above 3%.


• 3: "while the labor market looks fine on the surface, once we account for expected data revisions, private-sector payroll growth is near stall speed, and other data suggest that the downside risks to the labor market have increased. With underlying inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate."

Other Points

• "I believe that the wait and see approach is overly cautious, and, in my opinion, does not properly balance the risks to the outlook and could lead to policy falling behind the curve."


• Price effects from tariffs have "been small so far", possible the labour market falters before clarity on pricing is obtained, if it is ever obtained. "When labor markets turn, they often turn fast. If we find ourselves needing to support the economy, waiting may unduly delay moving toward appropriate policy."


• Can cut now and see how the data evolves.


• "see no reason that we should hold the policy rate at its current level and risk a sudden decline in the labor market"

01 Aug 2025 - 13:00- Fixed IncomeImportant- Source: Fed