According to Financial Associated Press on January 9 (Editor Huang Junzhi), Federal Reserve Governor Waller (Christopher Waller) stated on Wednesday that he still supports a rate cut this year, even though the Trump administration may impose widespread tariffs and there is a risk of inflation resurfacing in the USA.

According to Waller, he expects inflation rates to be closer to the Federal Reserve's 2% target in the coming months. In the first comments from a Federal Reserve official regarding the issue of tariffs, he stated that increasing import tariffs may not raise inflation this year.

Waller stated during the OECD meeting in Paris: "My basic expectation is that I believe further rate cuts are appropriate."

"If, as I expect, tariffs do not have a significant or lasting impact on inflation, then they are unlikely to affect my viewpoint," he added.

Waller's remarks are noteworthy because the impact of tariffs is the biggest uncertainty for the USA's economy under the Trump administration this year. In recent months, financial markets have been under pressure, partly due to concerns that inflation may continue to be an issue, and tariffs could make matters worse. Producers tend to raise prices for customers to offset the increased costs from tariffs on imported materials and goods.

However, Waller suggested that he is more optimistic about inflation than many Wall Street investors.

"I believe mid-term inflation will continue to move towards the 2% target, and further rate cuts will be appropriate," he said: "Other prices are cooling off, apart from the difficult-to-measure housing prices."

Waller's remarks are contrary to current expectations on Wall Street, which indicate that due to high prices, the Federal Reserve may not significantly cut interest rates this year, or may not cut at all. According to the CME FedWatch Tool, the market generally expects only one rate cut this year, likely in June.

However, in the aforementioned speech, Waller did not specifically indicate the expected magnitude of rate cuts. On the contrary, he stated that Federal Reserve officials expected two rate cuts this year back in December. But he also pointed out that policymakers support a range of outcomes, from no cuts to a maximum of five cuts. He added that the number of cuts will depend on progress in reducing inflation.

Federal Reserve Chair Jerome Powell previously stated that the impact of tariffs on Federal Reserve policy and inflation is difficult to measure in advance, requiring clarity on which imported products are affected by tariffs and whether other countries will take retaliatory measures.

However, at the last press conference held by the Federal Reserve in December, Powell also acknowledged that some of the 19 policymakers had begun to consider the potential impact of Trump's policies on the economy.

Other Federal Reserve officials recently suggested that after cutting rates in the last three meetings of 2024, the pace of cuts this year would slow down. For example, Federal Reserve Governor Lisa Cook stated on Monday that the Fed can be "more cautious" regarding rate cuts.

Editor/Rocky