Gate News message, April 17 — Fed Governor Christopher Waller said Friday that he is ready to support no rate cuts for the remainder of 2026 if inflation remains the primary threat to price stability. Speaking in Alabama, Waller outlined a challenging policy setup: a potential prolonged inflation shock coupled with a stable labor market showing minimal job growth, which could force the Fed to leave policy unchanged until clearer economic signals emerge.
Waller emphasized that if inflation risks outweigh labor market risks, the policy rate may need to remain in its current target range of 3.5% to 3.75% for an extended period. He noted that the break-even hiring rate may be approaching zero, suggesting minimal job additions could still prevent unemployment from rising. “Employers are walking a tightrope between earlier challenges in finding qualified workers and their economic outlook,” Waller said, adding that they remain vulnerable to shocks that could trigger significant job losses. He also warned that price pressures could persist longer than anticipated, particularly given tariff-related disruptions. “With this economic shock coming on the heels of the boost to prices from import tariffs, there is the possibility that this series of price shocks may lead to a more lasting increase in inflation,” he said.
Waller’s comments arrived amid ongoing debate over Fed leadership succession. Treasury Secretary Scott Bessent indicated this week that Waller and Vice Chair Philip Jefferson could serve as interim Fed chair if Jerome Powell’s term expires before a successor is confirmed. Powell has stated he would continue as “chair pro tempore” if no replacement is confirmed by May 15, a position supported by historical precedent—since 1935, five previous chairs have remained in place when their terms expired before Senate confirmation of a successor. The Senate is scheduled to hold confirmation hearings Tuesday for Kevin Warsh, Trump’s nominee to replace Powell.
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