Federal Reserve Governor Christopher Waller has indicated a possible shift in interest rates towards cuts in 2025, contingent on favorable progress regarding tariffs. His comments were made during an interview with Fox Business, where he discussed the potential for lower interest rates based on successful tariff negotiations this year. This suggestion aligns with his previously stated views on how trade developments might impact monetary policy. Waller’s optimism about these negotiations reflects a change in stance from previous predictions of potential rate hikes. He now envisions economic stabilization should tariffs be resolved, paving the way for possible interest rate adjustments later in 2025. The US Dollar Index remained relatively stable at 99.70 following his comments, indicating minimal market reaction despite the possibility of policy changes. The impact of historical tariff implications on inflation has been a key point of discussion. Waller’s view, which aligns with conventional economic theory, suggests that tariffs primarily cause temporary price fluctuations rather than long-term inflation. His position reflects the belief that waiting for resolution in tariff negotiations before adjusting interest rates is crucial. This approach aligns with previous experiences where sustained inflation followed post-pandemic periods. Market observers are closely watching further developments regarding these negotiations as they hold the key to potential economic shifts and changes in monetary policy strategies.