Federal Reserve Governor Christopher Waller said it's important for the US central bank to begin cutting interest rates this month amid rising risks of further weakening in the labor market.

Waller said he's also "open-minded" about the potential for a bigger rate cut and would advocate for one if appropriate, according to prepared remarks he's set to deliver Friday at the University of Notre Dame in Indiana.

"The balance of risks has shifted toward the employment side of our dual mandate," Waller said, adding that "policy needs to adjust accordingly."

"The current batch of data no longer requires patience, it requires action," he said.

US central bankers are scheduled to gather on Sept. 17-18 when the Federal Open Market Committee is widely expected to lower interest rates. Fed officials have held rates at their highest level in a generation for more than a year — a stance triggered by a burst of inflation that followed the Covid-19 pandemic.

Waller spoke just hours after the release of another disappointing employment report. Employers added fewer jobs than expected in August, Bureau of Labor Statistics showed. They also revised down the number of jobs added in July and June. The unemployment rate ticked down to 4.2% from 4.3% in July, reflecting a reversal in temporary layoffs.

Earlier this week, a separate report showed US job openings fell in July to the lowest since the start of 2021 and layoffs rose, consistent with other signs of slowing demand for workers.

"The data that we have received in the past three days indicates to me that the labor market is continuing to soften but not deteriorate, and this judgement is important to our upcoming decision on monetary policy," Waller said. He said it is likely that a "series of reductions will be appropriate," and that he is "open-minded about the size and pace of cuts." 

Source : Bloomberg