Slowing Economy Prompts Call for Action
Federal Reserve Governor Christopher Waller is urging the central bank to cut interest rates at its next meeting on July 29th. He believes a 25 basis point reduction is necessary to counteract a slowing US economy. Waller outlined three key reasons for this immediate action in a recent speech.
Tariffs, Labor, and Low GDP Growth
Waller downplayed the inflationary impact of tariffs, suggesting they’ll cause a temporary price spike rather than sustained inflation. He also pointed to labor market trends and a collection of economic data indicating persistently low GDP growth.
A Preemptive Strike
Waller argues that acting now is crucial to avoid falling behind the curve. He anticipates continued economic slowdown and believes waiting until September or later would be too late. He stated that if the economy slows further, waiting to cut rates would be a mistake. He prefers to cut rates now and then adjust policy based on subsequent data.
Bleak GDP Forecast
Waller doesn’t expect a significant economic rebound in the latter half of 2025. He forecasts annual GDP growth around 1%, a considerable drop from the 2.4% seen in 2024. He bases this prediction on current economic indicators and says that combining first and second-quarter data shows a significant slowdown.
Disclaimer: This information is for general knowledge and shouldn’t be considered investment advice. Always conduct your own thorough research before making any financial decisions.
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