"Exciting interest rate cut signal from the Fed for the markets."

The Federal Reserve (Fed) has signaled a rate cut for December. Fed Board Member Christopher Waller expressed that he is inclined to support a rate cut at the bank's meeting this month.

"RATE CUTS WILL CONTINUE THROUGH NEXT YEAR"

Waller stated that after the Fed reduced the policy rate by 75 basis points since the September meeting, he believes that monetary policy is still restrictive and has created upward pressure on inflation without causing unwanted weakness in the labor market. He expects that rate cuts will continue throughout next year until the policy rate approaches a more neutral level.

However, Waller noted that recent data has increased the likelihood that inflation will remain significantly above 2%.

"IT WILL DEPEND ON THE TREND OF INFLATION"

Waller pointed out that this risk has raised concerns that the Federal Open Market Committee (FOMC) should consider keeping the policy rate unchanged at the next meeting to gather more information about the future trend of inflation and the economy, stating:

"Based on the economic data we have today and forecasts indicating that inflation will continue to decline towards 2% in the medium term, I am currently inclined to support a rate cut at our December meeting. However, this decision will depend on whether the data we receive before that date surprises us positively and whether it will change my forecasts regarding the trend of inflation."

"THE LABOR MARKET HAS FINALLY BALANCED"

Waller expressed that after the 75 basis point cut, there is strong evidence that the policy continues to be significantly restrictive and that making another cut would only mean they are not "pressing the brake pedal that hard."

He also noted that another factor supporting further rate cuts is that the labor market finally seems to have reached a balance, emphasizing that this balance should be maintained.

The Fed's next meeting will be held on December 17-18.