Here’s What Federal Reserve Officials Said After Friday’s Jobs Report

The time for interest rate cuts is here, several Federal Reserve officials said Friday in response to more data showing a softening of the labor market.

Investors have felt certain that the Federal Reserve’s policy-setting committee will begin cutting its influential fed funds rate at its Sept. 18 meeting, despite only vague indications from central bankers themselves. However, several Fed officials used public speaking engagements Friday to be more explicit about their projections for the path of monetary policy.

Federal Reserve Gov. Christopher Waller said the jobs report released earlier in the day helped make the case for a rate cut.

“As of today, I believe it is important to start the rate-cutting process at our next meeting,” Waller said during a speech at the University of Notre Dame.

Friday is the last day for Federal Reserve officials to comment on monetary policy before the blackout period that proceeds Federal Open Market Committee meetings. Waller wasn’t the only Fed official to use his last public comments to lay out the case for rate cuts at the upcoming meeting.

“It is now appropriate to dial down the degree of restrictiveness in the stance of policy by reducing the target range for the federal funds rate,” New York Fed President John Williams told an audience at the Council on Foreign Relations.

Jobs Report Makes Case for Cuts

The comments come after Friday’s jobs report showed employers hired fewer workers than expected in August, providing more evidence that the labor market is slowing down in line with Fed officials’ expectations.

“The data today is consistent with what we’ve been seeing—a slowing economy, a bit of cooling off in the labor market,” Williams said.

The Fed hiked interest rates when inflation surged in 2022 and held it at its highest level since 2001 for the last year. Now, both inflation and the jobs market are showing signs of cooling.

That’s forced central bankers to focus on cutting interest rates before the labor market cools too much. Reducing interest rates will bring down borrowing costs across the economy, from mortgage rates to car loans to credit cards. That, in theory, should increase demand for goods and services, requiring employers to hire more workers.

Data Could Prompt Deeper Rate Cuts

In his remarks, Waller suggested upcoming data could influence the Federal Reserve to consider cutting even more than the quarter-percentage point reduction initially expected.

“If the data supports cuts at consecutive meetings, then I believe it will be appropriate to cut at consecutive meetings. If the data suggests the need for larger cuts, then I will support that as well,” Waller said. 

In an interview with MarketWatch this week, Chicago Fed President Austan Goolsbee expressed similar sentiments. He said recent data showed the central bank should not only cut rates “soon” but also plan to reduce them further at future meetings.