Federal Reserve Governor Christopher Waller stated on Friday that he would advocate for interest rate cuts later this year if signs of weakness emerge in the job market, while remaining vigilant about potential inflationary pressures stemming from the current geopolitical situation.

Waller pointed out that the closure of the Strait of Hormuz signals greater inflationary pressures, and rising oil prices could ultimately impact core inflation. He emphasized that the current cautious stance does not imply that the Fed will remain inactive for the rest of the year.

His remarks provide an important signal to the market: the window for rate cuts remains open, but it is contingent on a clear weakening in employment data.

Expressing doubts about the employment data, Waller admitted that after the last jobs report was released, he initially thought he would hold a dissenting view. He stated that while he rationally understands the logic behind the employment data, on an intuitive level, he cannot confidently assert that the job market is entirely healthy.

On the same day, Federal Reserve Vice Chair for Supervision Michelle Bowman said that due to concerns about labor market weakness, she anticipates three rate cuts this year.

"I remain concerned about the job market," Bowman stated in an interview with Fox Business. "To support the labor market, I support three rate cuts before the end of 2026," she said. During this week's Fed policy meeting, FOMC members unanimously decided on only one rate cut for this year.

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