Fed Governor Favors Another Interest Rate Cut In December
US Federal Reserve Governor Christopher Waller is backing another interest rate cut in December. The official believes it could be the key to resuscitate the weakening jobs market.
Labor Market: The Fed’s Primary Concern for Another Interest Rate Cut in December
According to Waller, the Fed’s “biggest concern” is the labor market. In an interview with Fox Business, he expressed confidence that inflation will eventually settle down. Additionally, he claimed that President Donald Trump’s tariffs only have a “minor” effect on the economy.
The Fed governor admitted that inflation remains at an elevated rate. Nonetheless, he explained that their forecast indicates “inflation coming back down to target.”
The Fed ‘Driving in the Fog’
Fed Chair Jerome Powell likened the central bank’s recent policies to “driving in the fog” due to the lack of economic data amid the government shutdown. Hence, he hinted that the institution’s recent interest rate cut may be the last this year, or it may revert to previous figures if economic risks worsen and inflation continues to move away from the Fed’s 2% target for a soft landing.
However, Waller argued that despite the delayed economic reports from key government agencies, the Fed is not driving blind. He emphasized that, contrary to Powell’s statement, the central bank has “a lot of data.”
Uncertainty Grips the Market
Powell’s cautious remarks last week caused a widespread pullback in cryptocurrency prices, even amid the temporary easing of the US-China trade tension. After all, uncertainty tends to have adverse effects on the markets. This included stock market indices, as S&P slightly dipped by slightly over 100 points or 1.45% from a $6,919.75 peak leading to the Fed’s rate cut announcement on October 29 to a $6,819.52 low on October 31 before closing at $6,840.20. Nasdaq and Dow Jones exhibited similar patterns within the period.
Meanwhile, the Crypto Fear & Greed Index again dialed back around the “Extreme Fear” territory at 29 rating on the way to Friday from “Neutral” at 51 score before the Fed announcement. This Monday, the scale is still at the “Fear” level at 42 as the market underwent $473.21 million liquidations, consisting of $413.68 million longs, in the last 24 hours.
Crypto Liquidation Heatmap (Source: Coinglass)
US Treasury Intensifies Call for December Rate Cut
US Treasury Secretary Scott Bessent agreed with Waller’s recent assessment. Although the official assured that the economy is in “good shape,” he warned in an interview at CNN that some of its sectors are at risk of a recession if it refuses to lower the interest rates further.
Bessent is clearly trying to quell public unease following Powell’s post-FOMC (Federal Open Market Committee) meeting pronouncement, while urging the Fed to lower interest rates at the same time. This came despite the Federal Reserve Bank of Atlanta’s 3.9% gross domestic product (GDP) growth estimate on its last report in October.