Federal Reserve Governor Christopher Waller expects that inflation will continue to make progress toward the central bank's 2% goal over the medium term and that further rate cuts will be appropriate,

A top policymaker at the US Federal Reserve says that he still supports reducing interest rates this year, despite elevated inflation and the prospect of widespread tariffs.

At its December meeting, the FOMC lowered the federal funds rate to a range of 4.25% to 4.5%. Committee members also adjusted their median projection rate for the end of 2025 to 3.9%, up from a projected 3.4% in September.

Federal Reserve officials in December signaled concerns that President-elect Donald Trump’s policies could stoke inflation, contributing to a more cautious approach to interest rate cuts this year and even a pause this month.

Federal Reserve officials at their meeting Dec. 17-18 expected to dial back the pace of interest rate cuts this year in the face of persistently elevated inflation and the threat of widespread tariffs and other potential policy changes.

Federal Reserve policymakers got fresh reasons to hold short-term borrowing costs steady after government data signaled renewed strength in the U.S. job market, with traders now betting the U.S. central bank will wait until June to cut interest rates again and end its rate-cutting cycle there.

Just before Joe Biden leaves the White House and Donald Trump returns, two prominent Republican members of the Federal Reserve Board are weighing in on how fast interest rates should come down. The two — Michelle Bowman and Christopher Waller — say rates can come down in a measured way.

Friday rose by +0.44% and posted a 2-year high. Friday’s stronger-than-expected US Dec payroll report pushed bond yields higher and boosted the dollar as unexpected signs of strength in the labor market reduced the chances of Fed rate cuts.