FOMC Waller : Time has come to begin reducing. Labor market softening/not deteriorating

Feds Waller is speaking and says:

• Believe maintaining the economy’s forward momentum means time has come to begin reducing policy rate at upcoming meeting

• Data in past three days indicates labor market is softening but not deteriorating; this judgment important to upcoming policy decision

• It is likely a series of reductions in policy rate will be appropriate

• Determining appropriate pace of cuts will be challenging

• Am open-minded on size and pace of cuts, will depend on data

• Will be an advocate for front-loading rate cuts if that is appropriate

• If future data shows significant deterioration in labor market, Fed can act quickly and forcefully

• Would also cut at consecutive meetings if data calls for it as I would be for larger cuts if needed

• Do not believe economy is in a recession or necessarily headed for one soon

• I stand ready to act promptly to support the economy as needed

• Sufficient room to cut policy rate and still remain somewhat restrictive to ensure inflation returns to 2%

• Current batch of data no longer requires patience, it requires action

• August jobs report and other recent data reinforces view there has been continued moderation in the labor market

• In light of ‘considerable and ongoing progress’ toward FOMC’s 2% inflation goal, balance of risks has shifted toward employment

• Monetary policy has to adjust accordingly as balance of risks has shifted to employment side of mandate

• Softening of labor market pattern consistent with moderate growth in economic activity

• Labor market and economy performing in a solid manner and future prospects are good

• See some downside risks to employment, will be watching closely

Wallers comments are more supportive of a larger cut at least down the road. That does not indicate there will be a 50 basis point cut to start the process, but not opposed to front loading cuts.

September priced in up to 41 basis points of cuts but is back down to 34 basis points.

This article was written by Greg Michalowski at www.forexlive.com.