Federal Reserve Governor Chris Waller said on Thursday said he favors cutting the Fed's policy rate in July. He also discussed the Fed's balance sheet and why it should continue to pay interest on bank reserves.

Federal Reserve governor Christopher Waller reiterated Thursday that he believes the Fed could consider cutting rates later this month because any inflation from tariffs will be temporary, underscoring a new divide within the central bank.

Federal Reserve officials diverged at their June meeting about how aggressively they would be willing to cut interest rates.

The minutes from the Federal Reserve's June 17-18 policy meeting are expected on Wednesday to show a divided central bank wrestling with the expected economic impact of rising U.S. import taxes and reluctant to commit to interest rate cuts until it is clearer how much the Trump administration's tariff increases will add to inflation.

The U.S. economy added 147,000 jobs in June, beating analyst expectations, the Bureau of Labor Statistics reported.

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Most Wall Street brokerages reaffirmed their rate cut forecasts after the U.S. Federal Reserve kept its policy rate unchanged last month. The U.S. central bank held interest rates steady as expected and maintained its projection for two cuts this year,