Fed’s Waller: Economic Slowdown from Trump Tariffs May Prompt Rate Cuts

Fed Governor Chris Waller stated that if President Trump’s large tariffs remain in place, the Federal Reserve may need to cut interest rates sooner than planned.

Despite potential inflation spikes up to 5%, Waller believes any tariff-induced inflation would be temporary, and the threat of economic slowdown would outweigh inflation concerns.

He outlined two scenarios: a “large tariff” scenario (25% average rate) that might require immediate action, and a “smaller tariff” scenario (10% average rate) that would allow for more gradual policy adjustments.