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Fed Still Has Room to Cut Rates Further Amid Labor Market Worries, Governor Waller Says

BY MT Newswires | ECONOMIC | 03:17 PM EST

03:17 PM EST, 12/17/2025 (MT Newswires) -- The Federal Reserve can afford to ease monetary policy further amid continued concerns regarding the labor market, Governor Christopher Waller said Wednesday.

Last week, the central bank's Federal Open Market Committee lowered its benchmark lending rate by 25 basis points, marking a third straight cut amid ongoing job market worries.

Although the labor market is not seeing a dramatic decline, it is continuing to soften, so "we can go at a moderate pace" of rate cuts, Waller said Wednesday at the Yale School of Management CEO Summit in New York. "We're close to zero job growth," he said, adding that it's "not a healthy labor market."

Earlier this week, delayed government data showed that job growth in the US rebounded in November after payrolls declined in October, while the unemployment rate shot up to 4.6% last month, the highest level in more than four years.

The FOMC is probably "50 to 100 basis points off of neutral," Waller said Wednesday, implying that policymakers can still afford to cut rates, if required. "I don't think we have to do anything dramatic."

Waller said he was "not particularly worried" about inflation being still above the FOMC's 2% target, as prices will likely start coming down in the next three to four months.

Markets are currently pricing in a roughly 76% probability that the central bank will hold interest rates steady next month, according to the CME FedWatch tool.

Waller is among the potential candidates to replace Jerome Powell as the next Fed chair, according to news reports. Powell's term as Fed chair is set to expire in May.

Fed Governor Stephen Miran preferred a 50-basis-point interest rate cut at the FOMC's meeting last week, while Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid voted in favor of a no-change stance.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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