Federal Reserve Gov. Christopher Waller is unsure whether he will vote to reduce interest rates next month..Speaking Feb. 23 during an economic policy conference in Washington, D.C., Waller said he would base his decision on unemployment and inflation data he receives before the Federal Open Market Committee’s next meeting, March 17-18.Waller said he would be open to keeping rates as is next month if the labor market improves and there is additional progress toward inflation. Core CPI inflation increased 2.5 percent on an annualized basis in January, down from 2.6 percent the previous month. Employers added an estimated 130,000 jobs last month. Waller expressed uncertainty over whether that indicated a longer-term trend or was a one-time improvement. He said the increase in consumer spending is being fueled by higher-income consumers who are relatively immune to economic downturns. “As things stand today, I rate these two possible outcomes as close to a coin flip,” he added of whether he will vote to reduce interest rates. “There is no dismissing the weakness of job creation in 2025, and, for the reasons I noted, it won’t be a huge surprise if the strong January report turns out to be noise and not signal.” Waller’s comments came after the FOMC kept interest rates at 3.50 to 3.75 percent in late January, after enacting three 25-basis-point reductions since September. January’s vote passed 10-2, with Waller and fellow Gov. Stephen Miran dissenting. U.S. payroll employment likely fell last year, which Waller attributed to a drop in net immigration. “I continue to believe that close to zero net job creation over 2025 indicates a weak, and fragile job market, and this is some important context for the data we received in January,” he said. “Even if inflation continues to make progress toward 2 percent, if the new labor data dent the idea of a turnaround and instead point to continued weakness like we saw in 2025, then there may be an equally credible case for a further reduction in the policy rate,” Waller said. Last Friday, the Supreme Court struck down President Donald Trump’s tariffs against foreign countries. Waller said it is too soon to decipher the impact of the decision. Trump has since announced 15 percent global tariffs, using a separate authority than the one he originally cited. Tariff increases have not impacted longer-term inflation predictions and had less impact on prices than expected, Waller added. He expects tariffs will only temporarily boost inflation. “Appropriate policy should look through tariff effects on inflation,” he said. Trump supports lowering interest rates to 1 percent or lower to energize the economy and reduce borrowing costs. He has publicly pressed Fed Chair Jerome Powell to more aggressively cut interest rates, taking issue with the Fed’s relatively cautious pace of interest rate reductions.
