The Fed is 'getting closer' to cutting interest rates, top official says

• The Fed will cut rates in the "not-too-distant future" if inflation and the labor market remain favorable. 
• That's according to Fed Governor Christopher Waller, who delivered remarks on Wednesday. 
• Other Fed officials still say they still need to see more data inflation is cooling. 

The Federal Reserve is getting ready to cut interest rates.

That was indicated in remarks by Fed Governor Christopher Waller on Wednesday, noting in comments at an event at the Kansas City Fed that the central bank would cut "in the not-too-distant future."

His comments nod to what markets believe is a surefire bet that a September rate cut is coming, though some have suggested a cut at this month's Federal Open Market Committee meeting would be warranted given the data.

In the past year, Waller has been cautious of advocating too strongly for a rate cut, and has instead argued for keeping monetary policy tight until inflation appears to be returning to the Fed's 2% target.

Now, Waller feels that progress in stabilizing prices and decreasing inflation since the second quarter are more conducive to a rate cut.

"While I don't believe we have reached our final destination, I do believe we are getting closer to the time when a cut in the policy rate is warranted," Waller said.

Waller said that if inflation continues in a "very favorable" direction, there may be a rate cut "in the not-too-distant future." If it continues to decrease but is more "uneven," a prompt rate cut may be less likely, he said.

Other Fed officials are still cautious.

Richmond Fed President Thomas Barkin spoke earlier at the Greater Prince George's Business Roundtable, sharing he wants to "proceed deliberately" on the possibility of a rate cut.

Barkin's comments were slightly more hawkish than Waller's, and he suggested the Fed needs more evidence that inflation will continue to decrease before cutting rates.

In a Tuesday interview with the Wall Street Journal, New York Fed President John Williams echoed Waller and Barkin's focus on inflation.

"We've got a few good months now. We had some months that weren't good on inflation. So I definitely want to see the data continue to show signs that we're moving sustainably to 2% to have greater confidence in that," Williams said.