Federal Reserve officials, including Christopher Waller and Jerome Powell, have hinted that interest rate cuts could be on the horizon due to cooling inflation. According to reports from the Kansas City Fed and The Financial Times, both Waller and unnamed Fed officials have suggested that data indicates a soft landing for the economy and a potential cut in policy rates. However, Powell has been cautious about signaling an exact timing for these cuts.
Waller, who is a Federal Reserve Governor based in San Francisco, stated during remarks at the Kansas City Fed that he believes current data support the idea of achieving a soft landing and that interest rate cuts may be warranted soon. He considers unexpectedly stronger inflation as the least likely scenario and sees the first two scenarios - moderate inflation and employment growth - as having a higher probability.
The Financial Times reported that unnamed Fed officials have also signaled that cuts are getting closer, but did not provide further details. Jerome Powell, the Chair of the Federal Reserve, has been more cautious about indicating an exact timing for these cuts during his speech at the Economic Club of Washington on Monday.
Despite some economists urging for earlier rate cuts due to moderating inflation reports, Powell did not give a clear signal about when officials would have enough confidence to lower borrowing costs. The Fed is scheduled to meet at the end of July and then again in September, and investors have been largely expecting that officials will begin to lower interest rates at the September meeting.
It's important to note that while these reports suggest a potential shift in monetary policy, they do not guarantee an imminent rate cut. The Federal Reserve will continue to monitor economic data closely before making any decisions.
