Fed member Christopher Waller signaled in a recent speech that the Fed could begin a series of rate cuts this month, but left the scope of those cuts open to interpretation.

Notably, Waller avoided specifying whether the cuts would be 25 or 50 basis points, but suggested starting with a 25 basis point cut. Waller also said future decisions would be driven by incoming economic data.

Nick Timiraos, often referred to as the “Fed spokesman,” responded to Waller’s comments by highlighting the conditional nature of his statements. Waller explicitly reserved the option to accelerate rate cuts if new data points to further economic deterioration.

“Based on the evidence I’ve seen, I don’t believe the economy is in or heading for a recession,” Waller said. But he stressed the need to be careful about the word “if.” “If the data shows a bigger cut is needed, then I will support that. When inflation accelerates in 2022, I have strongly advocated for an early rate hike and I will support an early rate cut ‘if’ that’s appropriate.”

Waller’s comments come two weeks after Federal Reserve Chairman Jerome Powell made comments at the annual global central banking conference, in which Powell said the “time is now” to ease policy in light of rising inflation and a cooling labor market. Waller echoed Powell’s views but struck a more assertive tone, saying he was willing to consider a significant first rate cut of 50 basis points if data warranted it.

Economic indicators released early Friday reinforced the view that the labor market is gradually slowing, with an average of 116,000 new jobs added per month over the past three months. Waller said the data, along with other recent economic reports, will play a critical role in shaping the Fed’s approach to rate cuts.

*This is not investment advice.