Fed Governor Waller (dissenter) says he dissented in favour of 25bps cut at last meeting because policy is still restricting activity too much

• Labour market remains weak despite solid economic growth.
• Labour market does not look remotely healthy, and while supply was a factor, demand is weak.
• Inflation is elevated from tariffs but monetary policy should look through those effects given anchored expectations.
• Expects weak job numbers from last year to be revised lower to reflect virtually no growth in payroll employment in 2025.
• Policy should be closer to neutral, and perhaps around 3% vs. current rate range of 3.50-3.75%.
• Heard of multiple layoffs planned for 2026 with considerable doubt about job growth and significant risk of a substantial deterioration.
• Inflation excluding tariffs is near Fed's 2% goal and on path to reach it.

Fed Governor Waller's dissent signals a hawkish sentiment among some officials regarding the current policy rate, advocating for a 25bps cut based on concerns that monetary policy is overly restrictive. His comments on a weak labor market and anticipated job revisions indicate a potential shift in the Fed's outlook, which could influence market expectations around future rate adjustments. This dissent might sharpen focus on the Fed's next moves, particularly in relation to growth and inflation dynamics, impacting the USD and fixed income markets.