A notable remark came from Federal Reserve Governor Christopher Waller, who expressed confidence that the US central bank could slash interest rates later this year. According to the official, recent economic data support this outlook.

In his view, the inflationary impact of President Donald Trump’s trade tariffs is unlikely to be sustained, giving the Federal Reserve more room to act decisively on rate cuts in 2025.

If core inflation moves closer to the 2% target, employment remains stable, and tariffs stay low, "I would be supporting 'good news' rate cuts later this year," Waller said.

The Fed official pointed to recent progress in bringing inflation down and emphasized that the US labor market remains strong. This gives the central bank "additional time to see how trade negotiations play out and the economy evolves" before deciding on interest rates, he added.

Waller's comments came just days after the release of the Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge, which showed a cooling trend in April, though core prices remained above the 2% annual target.

Nevertheless, uncertainty about the US economic outlook remains high, especially in light of President Trump’s aggressive tariff measures. Tensions between the US and China have flared up again, shaking investor confidence in reaching a durable trade agreement between the world's two largest economies.

Christopher Waller noted that the US economy had been relatively unaffected by Trump’s tariffs thus far. However, he cautioned that this could change in the coming months. Broad-based tariffs could impose a heavy burden on domestic businesses by raising their costs. This, in turn, could lead to potential wage pressures and further inflation, Waller concluded.