CNBC’s Steve Liesman and Federal Reserve Governor Christopher Waller join 'Squawk Box' to discuss the Fed's inflation fight, state of the economy, rate path outlook, strength of the labor market, impact of tariffs, and more.
Questions asked in this interview
7
0:12Where do you stand in this debate right now over how much concern we should have over coming potential inflation from tariffs?
1:25Do you think you could cut rates as early as July?
2:09Would you want to begin a process of bringing rates down by 125 or 150 basis points now?
2:59Why wouldn't you want to just wait and see what happens with tariffs and inflation in the coming months before you started cutting interest rates?
4:17How can you be so confident, Governor Waller, that a rise in prices from tariffs won't spill over into other prices and cause a broader inflation problem?
Thanks for joining us. I just want to begin with the big debate, and you can see it in the outlook for rates from the summer of economic projections. Where do you stand in this debate right now over how much concern we should have over coming potential inflation from tariffs?
Steve, as I've been saying for probably a year, I think the important thing for central banks to do is to look through tariff effects on inflation. This is a longstanding view going back 40, 50 years. So any tariff inflation we should see, and I've given various estimates that I don't think it's going to be that big, and we should just look through it in terms of setting policy and look at the underlying trend of inflation. Right now, the data the last few months has been showing that trend inflation is looking pretty good, even on a 12-month basis. I labeled these good news rate cuts. If inflation comes down to target, we can actually bring rates down. I've been saying this since about November of '23. So I think we're in that position that we could do this, and as early as July.
Well, I think that would be my view. Whether the committee would go along with it or not, but I think we are in the position that the data is good. GDP growth is going to be near our long-run target in the first half of this year. Unemployment is at our long-run target. Inflation is running very close to target. Yet we're 125 to 150 basis points above where the median long-run neutral policy rate is. So I think we've got room to bring it down, and then we can see what happens with inflation. If it got really bad and people got very nervous, you could just pause. But I think we're in a good spot right now for talking about bringing the rate down.
No. I think you'd want to start slow and bring them down just to make sure there are no big surprises, but start the process. That's the key thing. We can start the process of bringing rates down, and then if there's some big shock due to maybe the Middle East conflict, we can pause. We paused back in January. We've been on pause for six months to wait and see, and so far the data has been fine. There hasn't been any reason to, in my view — I shouldn't speak for the committee or the chair — but I don't think we need to wait much longer because even if the tariffs come later, the impacts are still the same. It should be a one-off level effect and not cause persistent inflation.
So let's talk about this difference of opinion with some on the committee. Obviously, the SEP showed the forecast showed that seven members don't want to cut rates at all. What is the urgency right now in your mind to cut interest rates? Why wouldn't you want to just wait and see what happens with tariffs and inflation in the coming months before you started cutting interest rates?
Right. So we've been on pause for six months thinking that there was going to be a big tariff shock to inflation. We haven't seen it. We follow the data. That is what we do. We look at the data and we should be basing policy on the data. And as I said, if you look forward, if you think this inflation is going to hit in August or September, it doesn't matter. It's the same impact. It's just a matter of timing. And I've been arguing since a year ago that central banks should be looking through this. This has been debated for 50 years in central banking. And the standard rule of thumb is you look through these types of price shocks. And that's what I'm arguing we should do. So if that's the case, start moving on cutting the policy rate.
10 more exchanges in this transcript
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Waller, C. (2025, June 20). Watch CNBC's full interview with Federal Reserve Governor Christopher Waller [Interview transcript]. CNBC Television. CEOInterviews.AI. https://ceointerviews.ai/interview/610445/
MLA
Christopher Waller. "Watch CNBC's full interview with Federal Reserve Governor Christopher Waller." CNBC Television, 20 Jun. 2025. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/610445/.
BibTeX
@misc{waller2025_610445,
author = {Christopher Waller},
title = {Watch CNBC's full interview with Federal Reserve Governor Christopher Waller},
howpublished = {Interview transcript, CNBC Television. CEOInterviews.AI},
year = {2025},
month = {jun},
url = {https://ceointerviews.ai/interview/610445/},
note = {Speaker-attributed transcript with timestamps}
}
