Waller proposed two tariff scenarios, suggesting that interest rate cuts could still be premature despite high inflation

According to Wall Street Journal reporter Nick Timiraos, Federal Reserve Governor Chris Waller, who is more dovish compared to other officials, proposed two policy response paths under different tariff scenarios: In a scenario with maintained "high tariffs" at an average of 25%, core PCE inflation could rise to 4% to 5%. If tariffs cause a significant economic slowdown and threaten a recession, he is inclined to cut rates early even if inflation remains above 2%. In a "low tariffs" scenario with only 10% tariffs, inflation would peak around 3% annually, with a weaker impact and slower transmission. If core inflation continues to decline, the Federal Reserve would consider rate cuts in the second half of the year.