Federal Reserve Governor Christopher Waller expressed disagreement with the officials' decision this week to hold interest rates steady, citing economic data that indicates a need for further rate reductions.

Waller stated in a declaration on Friday, "Monetary policy continues to restrain economic activity, and the economic data provides me with a clear view that further monetary policy easing is necessary."

Fed officials voted this week to maintain the benchmark policy rate in the range of 3.5% to 3.75%, citing an improved U.S. economic outlook. Waller dissented, advocating for a 25-basis-point rate cut.

This dissenting opinion reflects Waller's view that vulnerabilities persist in the labor market. He mentioned that the unemployment rate has risen since the middle of last year and employment growth has also slowed. He indicated that upcoming data revisions might show no growth in non-farm payrolls last year.

"I have heard about planned layoffs for 2026 in multiple outreach meetings," Waller said. "This indicates considerable uncertainty about future employment growth and suggests a significant risk of a substantial deterioration in the labor market."

Following three consecutive rate cuts by the Fed in the second half of 2025, Waller had previously stated there was no need to rush further policy easing, making his dissenting stance this week somewhat unexpected for the markets.

Waller also explained that the inflation rate, excluding the effects of tariffs, is close to the Fed's 2% target level.