Fed officials, including Governors Waller and Musalem, stress caution on rate cuts as inflation exceeds the 2% target and long-term borrowing risks persist.
Federal Reserve Governor Christopher Waller reaffirmed that the current 3.50%–3.75% interest rate range remains above the neutral 3% level, citing stable growth but weak labor markets with near-zero employment growth expected in 2025 and possible layoffs in 2026. Fed official Musalem also opposed further rate cuts this week, agreeing to maintain rates and warning that premature easing could raise long-term borrowing costs. Both underscored that inflation is still above the 2% target, influencing the Fed’s decision to hold rates steady since September 2024.