A top Fed official, considered a candidate to replace Powell, keeps calling for a rate cut this month

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A top official at the Federal Reserve on Thursday reiterated his call for an interest rate cut later this month, despite data showing ongoing resilience in the US economy and other central bankers pushing to keep rates steady. Fed Governor Christopher Waller, at a New York event, said the US central bank should lower borrowing costs at its July 29-30 policy meeting to preserve the labor market’s strength. “With 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,” he said. “I believe it makes sense to cut the (Fed’s) policy rate by 25 basis points two weeks from now.” (Twenty-five basis points equals one quarter of an interest rate point.) Waller, appointed to the Fed by President Donald Trump in 2021, is considered a contender to succeed Fed Chair Jerome Powell, whom Trump has excoriated for keeping rates steady and has vowed to replace next year — if not before. Treasury Secretary Scott Bessent told Bloomberg on Tuesday that a “formal process” has begun to identify Trump’s pick for Fed chair, and the president has said he will “very soon” announce his nominee. Waller’s stance is in contrast with most of the other central bankers who’ve said the Fed can afford to be patient for a bit longer to see how much Trump’s tariffs push up prices. And for now, the odds of a July rate cut remain very low, according to the futures market. For example, Fed Governor Adriana Kugler said Thursday at an event in Washington that the central bank should stand pat “for some time” because inflation has started to pick up on Trump’s tariffs and “given the stability in the employment side of our mandate.”