Squawk on the Street SOTS 2nd Hour: Fed Governor Waller, Canada’s International Trade Minister, and Trump’s Treasury Pick Before The Senate 1/16/25
Jan 16, 2025
Fed Governor Chris Waller shares insights on inflation trends and hints at potential interest rate cuts on the horizon. He emphasizes December's CPI data aligning with the Fed's inflation target. Canadian Minister of International Trade Mary Ng counters President Trump's tariff threats, stressing their negative impact on American consumers and businesses. The conversation highlights the importance of collaboration in trade negotiations to support economic growth and stability in U.S.-Canada relations.
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Potential Rate Cuts in 2025
- Core PCE inflation has been below 0.2 for six of the last eight months, nearing the Fed's 2% target.
- Rate cuts are possible in the first half of 2025 if this trend continues.
Disinflationary Trend
- While year-over-year inflation seems stubbornly high, recent monthly data suggests progress.
- Waller expects base effects and continued disinflation to bring inflation closer to the 2% target.
Factors Influencing Rate Cuts
- The number of potential rate cuts in 2025 depends on incoming data and the neutral rate.
- Three or four cuts are possible if inflation decreases and the labor market remains stable.