Fed's Waller: Tariffs are one-time price event that policymakers should look through

In a statement published on Friday, Federal Reserve (Fed) Governor Christopher Waller explained why he voted in favor of a 25 basis points (bps) rate cut at the July policy meeting.

Key takeaways

"I dissented because I concluded that cutting the policy rate by 25 basis points was the appropriate stance of policy."

"Believe tariffs are a one-time price event that policymakers should 'look through' as long as inflation expectations remain anchored, which they are."

"Host of data argues that monetary policy should now be close to neutral, not restrictive."

"While job market looks fine on the surface, other data suggest that the downside risks to the labor market have increased."

"Fully respect the views of my colleagues on the FOMC that suggest we need to take a 'wait and see' approach, but that is overly cautious."

"See no reason that we should hold the policy rate at its current level and risk a sudden decline in the labor market."

Market reaction

The US Dollar Index showed no immediate reaction to these comments and was last seen rising 0.1% on the day at 100.15.

These comments by Waller received a dovish score of 3.8% from FXStreet Fed Speech tracker. Nevertheless, FXStreet Fed Sentiment Index holds in hawkish territory, slightly above 120.