Investing.com — Federal Reserve Governor Christopher Waller said he would consider keeping interest rates unchanged at the Fed's March meeting if February employment data demonstrates continued labor market improvement following January's unexpectedly strong job growth.
January employment increased by 130,000 positions, which Waller described as “a surprise to the upside” during prepared remarks at a National Association for Business Economics conference. He said if February data shows similar strength, “my view of appropriate monetary policy may tilt toward a pause at our upcoming meeting.”
Waller had dissented at the Fed's January meeting, advocating for a quarter-percentage-point rate cut due to weak job growth and concerns about rising unemployment. He characterized his March decision as “a coin flip” dependent on February's employment report, scheduled for release March 6 ahead of the Fed's March 17-18 meeting.
The governor attributed current inflation pressures primarily to the Trump administration's import tariffs, expecting price pressures to ease as companies complete adjustments to the duties. A recent Supreme Court ruling struck down most of the new tariffs, though Waller said this was “unlikely to have a significant impact” on monetary policy direction.
Waller said he considers underlying inflation, excluding tariff effects, to be near the Fed's 2% target, allowing him to focus on employment conditions. He noted the challenge of determining whether January's job gains represent a genuine labor market recovery or will be revised lower with weak February hiring.
The Fed official acknowledged 2025's weak job creation while noting economic activity has exceeded expectations. He projected first-quarter GDP growth of approximately 2% from the fourth quarter of 2025, supported by solid consumer spending and recovering industrial activity.
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