Particle.news

Download on the App Store

Fed Holds Key Rate Steady as Waller Sees Room for Late 2025 Cuts

Waller said cuts hinge on inflation returning to 2 percent under his smaller-tariff scenario.

Federal Reserve Governor Christopher Waller speaks during The Clearing House Annual Conference in New York City, U.S. November 12, 2024. REUTERS/Brendan McDermid/File Photo
Image
Image
On August 19, 2024, Governor Waller delivered welcoming remarks at the 2024 Summer Workshop on Money, Banking, Payments, and Finance. (Federal Reserve via Flickr)

Overview

  • The Fed’s benchmark interest rate remained at 4.25%–4.5% for a third consecutive meeting as officials weigh uncertainty from trade policies.
  • Waller said tariff-driven price increases are likely one-off boosts that will not unsettle long-term inflation expectations.
  • He outlined a 10% “smaller-tariff” scenario and a 25% “large-tariff” scenario and said cuts depend on progress toward the Fed’s 2% inflation target and a solid labor market.
  • US and South Korea aim to finalize a trade package by July 8, with South Korean exports to the US down 8.1% in May following new tariffs.
  • The Bank of Korea cut its key interest rate by 25 basis points last week to support growth after exports declined.