Fed's Waller: There is no rush to cut interest rates given outlook

Key takeaways

"Jobs market is very soft, current payrolls growth not good."

"Fed rate cuts have helped jobs market."

"2026 could turn out to be a better year for economy, hope that helps job market."

"Inflation above target but should come down over next few months."

"Inflation expectations are anchored."

"Don't know yet what AI will do to job market."

"There's not going to be a re-acceleration in inflation."

"The job market says Fed should continue to cut rates."

"We are not seeing job market go off a cliff."

"Fed can go at a moderate pace, doesn't need dramatic action."

"Fed is 50 to 100 basis points over neutral."

"I think that inflation is going to come down."

"Hard to say tariffs caused job market weakness."

"Not wrong for there to be interactions between Fed and administration."

"Fed can cut interest rates just off of moderating inflation outlook."

"New Fed asset buying is not stimulus."

Market reaction

These comments received a neutral score of 4.6 from FXStreet Fed Speech Tracker and failed to trigger a significant market reaction. At the time of press, the US Dollar Index was up 0.3% on the day at 98.50.

Fed FAQs

What does the Federal Reserve do, how does it impact the US Dollar?

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

How often does the Fed hold monetary policy meetings?

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

What is Quantitative Easing (QE) and how does it impact USD?

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

What is Quantitative Tightening (QT) and how does it impact the US Dollar?

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.