Federal Reserve Governor Christopher Waller has publicly endorsed a 25 basis point interest rate cut at the upcoming Federal Open Market Committee (FOMC) meeting scheduled for December 9-10, citing significant weakness in the U.S. labor market as the primary reason. Waller pointed to declining job postings, weak payroll data, and conversations with CEOs about corporate layoffs as evidence supporting his position, stating in a speech titled “The Case for Continuing Rate Cuts” that this move is necessary for risk management.
He emphasized, “This reading of the data leads me, at this moment, to support a cut in the FOMC’s policy rate at our next meeting on Dec. 9 and 10 as a matter of risk management.” Waller, who is considered a candidate for the Fed chair position when Jerome Powell’s term ends in May, noted that he is not concerned about inflation surging rapidly, focusing instead on protecting against a faster decline in the job market.
The potential rate cut could lower the cost of capital, increasing liquidity in financial markets and benefiting cryptocurrency assets like Bitcoin (BTC) and Ethereum (ETH). Historical data suggests that past interest rate cuts have often been followed by rallies in cryptocurrencies, and experts project that this decision may lead to increased risk-taking among investors, higher inflows into decentralized finance (DeFi) protocols, and rising total value locked (TVL) in DeFi ecosystems.
However, Fed officials remain divided on the issue, with some expressing concerns about ongoing inflation or potential job losses. Recent statements have lowered the probability of a December cut to about 40%, down from nearly 100% before the October meeting, highlighting uncertainties ahead of the key decision.
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