Fed’s Chris Waller Says Labor Market Is ‘Very Soft,’ Signaling Support for More Rate Cuts

Fed Governor Chris Waller has again shown his support for rate cuts due to the current labor market conditions. He also indicated that the labor market should be the priority, as he doesn’t expect inflation to reaccelerate. More potential Fed rate cuts mark a positive for the crypto market, as they could inject more liquidity.

Waller Signals Support For More Fed Rate Cuts Over Labor Market Concern

Speaking at the Yale CEO Summit, the Fed governor said the labor market indicates they should make more rate cuts. He remarked that the jobs market is “very soft,” with current payroll growth not good. Waller added that the U.S. job growth is close to zero.

His comment comes just a day after the release of the U.S. jobs data, which showed that the unemployment rate rose to 4.6% in November, the highest since 2021. Notably, the FOMC made three Fed rate cuts this year due to concerns over the softening labor market.

Waller further suggested that the labor market should remain their priority over inflation heading into 2026. He stated that inflation remains well anchored around their 2% goal, and he doesn’t expect it to reaccelerate.

Meanwhile, Waller stated that interest rates remain 50 to 100 basis points (bps) above neutral, indicating there is still room for more Fed rate cuts. However, he added that they can steadily lower rates, as there is no need to rush. This is contrary to Fed Governor Stephen Miran, who supports larger cuts of up to 50 bps to bring the rate down to a neutral level quickly.

Waller Comments On Fed Chair Candidacy

Waller is currently one of the candidates to replace Fed Chair Jerome Powell. The Fed Governor, whom Trump plans to interview, stated that he will emphasize to the U.S. president the importance of Fed independence.

Trump recently stated that he believes that the Fed chair should consult with him on where to set interest rates. He also revealed that the next chair must immediately make more Fed rate cuts.

This is based on his belief that interest rates in the U.S. should be as low as 1%. Notably, rate-cut advocate Kevin Hassett is currently the favorite to replace Powell. Polymarket data shows a 56% chance that Trump will nominate him. Meanwhile, Waller is the second favorite with a 21.6% chance of becoming the next Fed chair.