Fed's Waller Calls for Careful Rate Cuts in Support of Labor Market

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Transcript

00:00I want to talk about the meeting that takes place at the end of this month as well.

00:02You were pretty clear going into the last meeting.

00:04You delivered a speech, and I believe the title was, Let's Get On With It.

00:07Are you advocating for the same thing at this meeting?

00:10Yeah, I think it's the right thing to do.

00:13Back then, there was an issue of whether you go 50 or 25,

00:17and I argued we could do 25 and see how the data comes in.

00:21Of course, we're not getting much data, and then we can think about the next 25.

00:25So in the last six weeks, I don't think a lot has changed.

00:27We're not getting the public data, but all the private sector data that we're getting,

00:32Beige Book yesterday, everything we're getting is telling roughly the same story.

00:35The labor market's weak.

00:38Growth seems to be on the stronger side, which is a bit of a puzzle right now

00:42because you can't have a really strong growing economy and negative job growth.

00:47There's zero job growth.

00:48People talk about productivity, but AI hasn't had that effect yet on the labor market or productivity.

00:54It will down the road, I think, but not right away.

00:56So I don't think that's the story that's driving it.

00:59So in that case, one of these things has to move, right?

01:02Either GDP numbers start coming back down or the labor market rebounds.

01:06You just can't have a growing economy and, you know, very weak labor market.

01:11They just don't go together.

01:12In the meantime, do you just continue to reduce interest rates meeting by meeting

01:16as you wait to see what's going on?

01:18What's your overall approach and what do you think about that?

01:20That's exactly what I've been arguing.

01:22Since we don't know which way this is going to break, if the labor market rebounds,

01:26there's less pressure for cutting rates.

01:28If the growth comes back down, there's more pressure for cutting rates.

01:31You don't want to make a mistake.

01:33So the way to avoid that is to go cautiously or carefully and do 25, wait and see what happens,

01:40and then you can get a better idea of what to do.

01:43But if you've already started the process, you're providing whatever's initial support

01:47for the labor market that you feel is necessary.