Federal Reserve Governor Christopher Waller said on Thursday that the central bank could cut interest rates multiple times this year if inflation eases as he expects.

The policymaker said in an interview with CNBC that he expects the first rate cut to likely come in the first half of the year, with other cuts to follow as long as economic data such as prices and unemployment cooperate.

“As long as the inflation data is good or continues on that path, then I definitely see a rate cut happening sooner than the market is pricing in,” Waller said at a conference.quack in the street” Interview with Sarah Eisen.

Asked how much that might take, he responded: “It’s all going to be data-driven. I mean, if we make a lot of progress, you can do a lot more,” which he said could mean three to Four, assuming a quarter percent point increment.

“If the data doesn’t cooperate, then you’re going to be back to two, maybe even back to one if we have severe sticky inflation,” he said.

After Waller spoke, traders increased bets on a slightly more aggressive pace of rate cuts. Market-implied probability of a move in May rose to around 50%, although June appears to be the better bet, according to CME data. Expectations for a second cut by the end of the year climbed to about 55%, or about 10 percentage points higher than before he spoke.

At the heart of Waller’s desire to ease policy is the belief that inflation will ease further over time, despite months of data showing stickiness in some key prices. this consumer price index The core reading excluding food and energy slowed to 3.2% in December, down 0.1 percentage point from the previous month but still well above the Fed’s 2% target.

“Right now, I think inflation will continue to be close to our target. I think the stickiness we saw in 2024 will fade away year by year,” he said. “So I’m probably more optimistic about falling inflation than some of my colleagues, and that’s what drives my outlook on the policy path.”

At its December meeting, FOMC members expected two rate cuts in 2025, although comments after the meeting noted that the Fed would take a cautious and patient approach.

The next Federal Open Market Committee (FOMC) meeting will be held on January 28-29, and markets are pricing in little likelihood of action.

“Well, in January, we need to see what happens… We’re really in no rush to do things,” Waller said.