Get 100% ad-free experienceJuly Rate Cut Now Has Single Fed VoteView all comments (0)0Fed Governor Christopher Waller was crystal clear in a speech on Thursday that he would like the Fed to cut rates in July. Importantly, consider the first line of his speech at NYU:My purpose this evening is to explain why I believe that the Federal Open Market Committee (FOMC) should reduce our policy rate by 25 basis points at our next meeting (July 30th).As we share below, investors place the odds of a July rate cut at a mere 4.7%. Moreover, no other Fed members have called for a rate cut in July. Let’s examine Waller’s speech and highlight a few reasons he believes a July rate cut is necessary.Tariffs do not cause inflation.“Tariffs are one-off increases in the price level and do not cause inflation beyond a temporary surge. Standard central banking practice is to “look through” such price-level effects as long as inflation expectations are anchored, which they are.”Weakening Labor Market: He thinks the labor market looks “fine on the surface,” but BLS data revisions and non-BLS data point to downside risks. Notably, ADP has shown no growth in the last three months.Rates Are Too Restrictive: Real GDP growth is running around 1% and he expects similarly slow activity in the second half. Combined with a weak labor market and transitory tariff-related inflation, he states:Taken together, the data imply the policy rate should be around neutral, which the median of FOMC participants estimates is 3 percent, and not where we are, 1.25 to 1.50 percentage points above 3 percent.The Week AheadEarnings will likely be the predominant driver of stock prices this week. As we share below, courtesy of Earnings Whispers, Tesla (NASDAQ:TSLA), Google (NASDAQ:GOOGL), and numerous other large companies will report.We believe that the earnings of consumer-facing companies, such as Tesla, Coca-Cola (NYSE:KO), Domino’s Pizza (NASDAQ:DPZ), and Southwest Airlines (NYSE:LUV), will help us better assess consumer spending trends.Fed Chair Powell will speak on Tuesday. Given recent inflation data and the reversal of inflation expectations, we will be interested in hearing if he starts to take on a more dovish tilt. For example, consider the decline in Friday’s UM 1-year inflation forecast, which is shown below the earnings graphic. We do not expect him to opine on the prospect of Trump firing him.Tweet of the DayJuly Rate Cut Now Has Single Fed VoteView all comments (0)0Latest commentsInstall Our AppScan QR code to install appRisk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.© 2007-2025 - Fusion Media Limited. All Rights Reserved.