NEW YORK (Reuters) -Federal Reserve Governor Christopher Waller said on Thursday he continues to believe the U.S. central bank should cut interest rates at the end of this month amid mounting risks to the economy and the strong likelihood that tariff-induced inflation will not drive a persistent rise in price pressures.

"It makes sense to cut the FOMC's policy rate by 25 basis points two weeks from now," Waller told a gathering of the Money Marketeers of New York University.

"I see the hard and soft data on economic activity and the labor market as consistent: The economy is still growing, but its momentum has slowed significantly, and the risks to the (Federal Open Market Committee's) employment mandate have increased," and that justifies cutting rates, he said.

All the evidence suggests the Fed can look through the impact of tariffs and focus on other issues affecting the economy, he added.

The Fed's next policy meeting is scheduled for July 29-30.

Waller is one of two Fed officials who have expressed interest in cutting rates this month, reckoning the import tax surge will be a one-time event that policy makers can look through.

A July easing could be followed by more rate cuts, as the Fed no longer needs a monetary policy stance designed to slow the economy, Waller said, noting the Fed's interest rate target is well above the 3% officials consider its long-run level. 

If underlying inflation remains in check and expectations of future price increases stay contained amid slow growth, "I would support further 25 basis point cuts to move monetary policy toward neutral," he said.

A neutral level rate is considered neither contractionary nor expansionary.

The last time the Fed cut rates was in December 2024, when it trimmed its policy rate by 25 basis points.

Waller warned that not easing this month could create issues down the road.

"If we cut our target range in July and subsequent employment and inflation data point toward fewer cuts, we would have the option of holding policy steady for one or more meetings," Waller said. But if economic weakness accelerated, "waiting until September or even later in the year would risk us falling behind the curve of appropriate policy," he said.

Fed policy is not on a preset course and decisions on where to set rates would be done meeting-by-meeting, he added. 

Waller is one of the last central bank officials to weigh in on the economy as policy makers go into their customary quiet period ahead of the policy meeting at the end of this month. 

Most central bank officials who have spoken have signaled no interest in changing the Fed's 4.25% to 4.5% interest rate target now as inflation remains above target, the economy is generally faring well, and it's unclear how much upward price pressure President Donald Trump's trade tariffs will create.

Financial markets are currently pricing in a September starting date for rate cuts and Fed officials penciled in two easings at their June meeting.

Waller stressed in recent remarks his interest in cutting rates soon was "not political." Waller is widely viewed as in the running to succeed Fed Chairman Jerome Powell, who has been under regular attack from Trump for not cutting rates.

Waller was asked at the gathering whether anyone from the Trump administration had approached him about becoming Fed chair. He replied "no," without elaboration. 

On Wednesday reports indicated the president was close to firing Powell amid a lack of clarity over whether the action would be legal, with Trump later denying those reports.

The Fed has also been in the crosshairs of the administration over cost overruns involving its headquarters, and Waller said that it was not uncommon for these types of projects to see something like this happen. 

In his remarks, Waller noted data points to a job market that is "on the edge" of trouble. At the same time, he said that if 10% tariffs were sustained, that would add only 0.75% to 1% to inflation.

Waller also said the cost of paying for Trump's import tax surge will be split: Consumers will pay for a third of the increase, with the remainder split between foreign goods producers and the importers of those products.