Earlier this week, the Fed met for its Federal Open Market Committee (FOMC) meeting and decided to leave interest rates unchanged in a range between 4.25% and 4.50%. While the chances of a July rate are only 12.4%, according to CME’s FedWatch tool, at least one committee member supports it.
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“I think we’re in the position that we could do this and as early as July,” said Fed Governor Christopher Waller in an interview with CNBC’s Squawk Box. “That would be my view, whether the committee would go along with it or not.”
Inflation Shock Hasn’t Arrived, Says Waller
Waller added that the process of cutting rates should start slow, which would mean cutting by 25 basis points at a time. He also said that the central bank has held out on cutting rates for six months in order to wait for an inflation shock that has never materialized.
“Why do we want to wait until we actually see a crash before we start cutting rates?,” said Waller in regard to the labor market, which has remained resilient.
Lower interest rates could provide the stock market with a boost, as it decreases borrowing costs for both companies and individuals. That could stimulate corporate growth and spending, stimulating the economy in the process.
Keep up with the federal funds rate and other key economic metrics with TipRanks’ Economic Indicators Dashboard.
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