Market expectations regarding interest rate cuts have been significantly influenced by recent comments from Federal Reserve Gov. Christopher J. Waller at The Brookings Institution. Waller emphasized a cautious approach, prioritizing economic stability and inflation management, indicating that the Fed will not rush to implement rate cuts in the near future. He highlighted the strength of economic activity and labor markets, expressing skepticism about the need for rapid rate reductions given the good state of the economy and gradual decline in inflation towards the 2% target. Waller also mentioned the recent deceleration in GDP growth, indicating a deliberate cooling down of the economy. In terms of the labor market, he shared positive employment data but cautioned about a potential slowdown in job growth. Waller discussed the core personal consumption expenditure (PCE) inflation rate, which has remained close to the Fed’s target for the past six months, and stressed the need for sustained progress in managing inflation. Looking ahead, he suggested the possibility of a rate cut in 2024, contingent on forthcoming data, and emphasized the importance of careful and gradual policy adjustments. As a result of Waller’s comments, market reactions included a reduction in expectations for a March rate cut, a rise in Treasury yields, and downturns in stocks.