Federal Reserve’s Christopher Waller Backs 25 Bps Cut for September 2025
Federal Reserve Governor Christopher Waller has recently voiced his support for a 25 basis point interest rate cut in the upcoming September 2025 FOMC meeting, citing persistent weaknesses in the U.S. labor market. Waller’s stance marks a shift from his earlier dissent against a similar rate reduction proposal in July, highlighting evolving economic concerns as job growth softens and inflation moderates.
While Wall Street had broadly anticipated a gradual easing trajectory, Waller’s renewed call for a modest reduction has reignited debate across financial circles. Some market strategists, referencing the slowed pace of hiring and muted wage growth, argue that the Fed risks falling behind if it waits too long to act more aggressively.
Economists Ask: Why Not a 50 Basis Point Cut?
Despite Waller’s measured approach, influential economists have openly questioned whether a mere 25 basis point cut is sufficient for the current climate. With leading indicators suggesting the labor market remains fragile and inflation now hovering near the Fed’s 2% target, the case for a more decisive 50 basis point move has gained traction. Proponents assert that a larger cut would provide a stronger safety net for the real economy, stimulating borrowing and supporting consumer sentiment.
This policy crossroads comes at a critical moment for markets. The Invesco QQQ Trust (NASDAQ:QQQ) and SPDR S&P 500 ETF Trust (ARCA:SPY) have both experienced heightened volatility as investors recalibrate their rate expectations heading into the final quarter of 2025. Stocks initially rallied on prospects of dovish monetary policies but remain sensitive to signals from the Fed about its willingness to step up support in a cooling economy.
The Path Forward: What Investors Need to Watch
Looking ahead, market participants will keep a keen eye on incoming data, especially labor market releases and updated inflation prints. Should economic fundamentals deteriorate faster than expected, pressure could mount on the Federal Reserve to deliver more aggressive easing. For now, Waller’s backing of a 25 basis point cut is seen as a reassurance of the central bank’s commitment to a data-driven approach, maintaining flexibility in the face of uncertainty.
Ultimately, the Fed’s September decision will set the tone for the remainder of 2025. A cautious cut could stabilize markets, but bolder action — should it materialize — might be necessary to shield the economy from the risk of a sharper downturn.
