Federal Reserve Governor Christopher Waller argued at a Yale University CEO Summit today that the central bank should press forward with rate cuts even as job growth stalls near zero.
He also offered a sobering observation about the housing market: lower rates may not matter much if potential homebuyers are too worried about losing their jobs to make the biggest purchase of their lives.
“Everybody’s afraid for their jobs. I’m dead serious,” Waller explained. “I talked to homebuilders; they were saying the biggest reason people are not buying homes is that they’re worried about losing their jobs…It’s not about interest rates; price matters, but it’s really like, ‘Am I guaranteed I’m going to be able to make the payment in six months,’ and that’s what people are scared of.”
Touching on the November jobs report released yesterday—which saw 64,000 jobs added and an unemployment rate of 4.6%—Waller characterized the current labor market as “very soft.”
He also hinted that November’s jobs data will likely show even less job growth when it’s eventually revised.
Regarding the state of the labor market, he pointed to interactions he had with CEOs around the country “earlier this summer when the job numbers were looking very good,” but at the same time, “other sources of soft data (showed that) the labor market wasn’t doing that well.” Waller then pointed to the time when the July jobs report was released, and everything was revised down significantly.
“The jobs numbers are around 50 to 60 thousand the last couple of months on average, and we know that that’s too high, and those are most likely to get revised down when we get the unemployment insurance administrative data later,” he said. “So we’re close to zero job growth. Now that’s not a healthy labor market.”
After that July report, President Donald Trump fired the head of the Bureau of Labor Statistics (BLS), which collects and presents monthly data on employment, making so far unsubstantiated claims that the data was being manipulated.
Today, with BLS data still showing shakiness, Waller said there is a chance for things to turn around in 2026 due to “a lot of tariff uncertainty going away,” and the “preemptive rate cuts” started in September.
“Right now, my focus as governor has just been to focus on the labor market. Inflation—I’m not particularly worried about; I know it’s above target, but I believe it’ll start coming down in the next three to four months,” Waller explained. “The critical thing for me is the employment leg of our dual mandate, and the inflation will come back down.”
He signaled that future rate cuts would continue at a moderate pace.
“We’re not seeing a dramatic decline of a labor market going off a cliff, just kind of just continuing to just soften and soften. So we can go at a moderate pace; I don’t think we have to do anything dramatic,” Waller noted. “If you have to do something dramatic, it’s too late. You waited too long.”
Touching on the Fed’s independence, Waller made it clear that he would emphasize the importance of that independence to President Trump. Waller at one point was rumored to be a top choice to take the role of chair at the Fed after Jerome Powell, who has been at the helm since 2018, sees his term expire in May of 2026.
“I spent 20 years of my life working on central bank independence and why it was important…(t)he one thing everybody always forgets (about) the central bank’s independence is that there’s another side to it, which is accountability,” he said. “There’s no institution in this country that is unaccountable to the electorate…We want central bank independence to be free of political interference, but we still have to be accountable to the American public.”
Raphael Bostic comments oppose Waller’s
Despite the voting board at the latest Federal Open Market Committee (FOMC) choosing to bring interest rates down by a quarter basis point—suggesting Waller’s view that unemployment is the higher concern compared to inflation—the latest FOMC votes have seen noted dissent.
Raphael Bostic, retiring president of the Atlanta Federal Reserve and a FOMC non-voting member, was an opponent of the December rate cut, for instance. Bostic has given recent statements—including in a Dec. 17 talk before the Gwinnett Chamber of Commerce in Georgia—that fall on the opposite side of Waller’s view; i.e., that rising inflation represents the bigger concern than the labor market. Bostic has even predicted there will be no interest rate cuts in 2026 due to inflation concerns.
At the Gwinnett moderated talk, Bostic characterized it as a “difficult time” for central bankers, as the Fed’s dual mandate of price stability and maximum employment currently sit in tension. He noted that inflation has sat above the Fed’s goal of a 2% annual inflation rate for some time, and that if 2% is not reached, that could affect business owners’ decision-making (i.e., accepting a 2.5% annual inflation rate as close enough to the Fed’s goal).
As for the labor market, Bostic characterized the economy as “resilient” overall, and argued current layoffs suggest businesses looking to maximize productivity rather than pulling back due to lack of consumer desire that would indicate a coming recession.
Assistant Editor Devin Meenan contributed to this report.
