Waller, who was interviewed on Fox Business’s television channel, said the key to the outlook depends on where the Trump administration’s tariff policy settles out. If those tariffs hit the lower end of the range relative to some of the more draconian levels seen as the start of President Donald Trump’s global trade war, then the outlook appears solid.

“If we can get the tariffs down close to the 10% and then that's all sealed, done and delivered somewhere by July, then we're in good shape for the second half of the year, and then we're in a good position to kind of move with rate cuts through the second half of the year,” Waller said.

The policymaker did not say how or when he expects the Fed to lower what is now a federal funds target rate range set between 4.25% and 4.5%. Financial markets are looking toward a modest amount of rate cutting later in the year, even as Fed officials and many in the private sector acknowledge huge uncertainty around the outlook tied to trade policy.

Many of the more aggressive aspects of the tariff policy are suspended pending the success of trade deals, so there remains little clarity on how things will shake out. Economists generally believe tariffs of the sort favored by the president will drive up inflation while lowering growth and employment. Trump’s retreat on tariffs thus far has caused forecasters to lower what had been high odds the economy would fall into recession.

Waller, in his interview, also took on a Republican tax plan that appears likely to add significant amounts of borrowing to already massive deficits. Financial markets have wobbled as Republicans have moved forward on the legislation, as government bond yields have been rising. Higher borrowing costs add restraint to economic activity and could affect how the Fed thinks about future monetary policy choices.

“The markets are watching the fiscal policy” now being considered “and they have some concerns about whether it's going to be reducing the deficit. I mean, we ran $2 trillion deficits the last few years. This is just not sustainable,” Waller said.

“Markets are looking for a little more fiscal discipline, they're concerned,” Waller said. As the version of the bill passed on Thursday by the House also needs to go through the Senate, Waller noted markets might demand a premium to buy government debt until it's clear government spending will moderate.

Waller noted there’s a general level of concern right now over U.S. assets.

“There does seem to be, you know, a risk-off on American assets across the board, not just government debt, but everything,” Waller said. “And whether that continues in the future or not, I don't know.”

Waller said that if the economy gets back “on a good path” and inflation “stays down,” then “you might see a resurgent demand for American assets.”

Waller also said in the interview that he continues to believe that standard economics reckons any tariff-related inflation will be a one-time shot that Fed policymakers can look through. He said a 10% tariff regime should have only a modest impact on real-world price increases and noted that he has seen nothing so far to suggest the tariffs would create persistent upward pressure on prices.