No more pretending! Federal Reserve Governor Waller: If the President offers me the position of Federal Reserve Chair, I would accept

Federal Reserve Governor Waller publicly expressed interest in the position of Federal Reserve Chairman, while hinting at the possibility of a rate cut in July, believing that the weakness in private sector employment is a reason to take action this month.

In an interview with the media on Friday, Waller stated that concerns about the hiring situation in the private sector are the core driving factors behind his call for the Federal Reserve to cut rates this month. He noted that last month's job growth primarily came from the public sector, indicating that the condition of the private sector is not as healthy as generally perceived. He even suggested that if his colleagues decide not to cut rates at the meeting on July 29-30, he may voice his dissent.

During the interview, Waller also made candid comments about the possibility of succeeding current Chairman Powell. When asked how he would respond if President Trump invited him to serve as Federal Reserve Chairman, Waller replied:

“If he said, ‘Chris, I want you to do this job,’ I would say ‘Okay.’”

Following his remarks, the dollar index fell 0.39%, hitting an intraday low, and U.S. Treasury yields also dipped slightly. The market generally anticipates a rate cut in September, while Waller's call for a rate cut in July is clearly more aggressive than the market consensus.

Weak Private Employment is Key to Rate Cut

Waller's explanation for his call for a rate cut is entirely focused on structural issues in the labor market. He emphasized:

“The performance of the private sector is not as good as everyone thinks.”

This judgment is based on the June Non-Farm Payroll Report released on July 3, which showed that although the overall unemployment rate slightly decreased, job growth in the private sector slowed, and wage growth also began to decelerate. Waller's view is that with limited inflation risks, the Federal Reserve should lower borrowing costs before the labor market begins to deteriorate, which aligns with the main theme of his speech in New York on Thursday.

Publicly Expressing Interest in Serving as Federal Reserve Chairman

As Chairman Powell's term is set to end in May next year, Waller's name has been among the potential successors. He clearly stated in the interview that he would accept the nomination if offered.

However, Waller also added that President Trump has not contacted him regarding this matter and described it as currently just an “irrelevant hypothesis.”

While expressing his personal willingness, Waller emphasized that whoever the president chooses must gain the trust of the financial markets; otherwise, inflation expectations and interest rates will rise.

Waller stated that if the next chairman lacks this credibility, “you will see inflation expectations soar, but you will not get lower interest rates. You will get higher interest rates.” He added that the consequences when this happens are a universal rule that has been verified globally