Fed’s Waller Says March Rate Cut Is a ‘Coin Flip’/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Federal Reserve Governor Christopher Waller said a March rate cut is a “coin flip” after stronger-than-expected January job gains. He signaled the Fed may pause rate reductions if labor market strength continues. President Trump renewed pressure on the Fed as economic growth slows and tariff uncertainty persists.
Fed March Rate Cut Decision Quick Looks
- January added 130,000 jobs, beating expectations
- Fed’s benchmark rate currently around 3.6%
- March rate decision described as “coin flip”
- Waller previously dissented in favor of cuts
- Supreme Court tariff ruling seen as limited economic impact
- Trump urges lower rates amid slowing growth
- February jobs report seen as decisive
Deep Look: Fed’s Waller Says March Rate Cut Is a ‘Coin Flip’
Federal Reserve Governor Christopher Waller said Monday that the central bank’s upcoming March interest rate decision remains highly uncertain, describing the possibility of a cut as “close to a coin flip” following a stronger-than-expected January jobs report.
Speaking at a conference hosted by the National Association for Business Economists, Waller indicated that recent hiring gains may give policymakers room to pause rather than lower rates at their next meeting.
Stronger Job Gains Complicate Rate Outlook
U.S. employers added 130,000 jobs in January — more than analysts anticipated — suggesting potential stabilization after what Waller characterized as a very weak labor market throughout 2025.
However, Waller cautioned that one month of stronger hiring does not confirm a sustained rebound. He emphasized that he would need to see similar strength in February’s employment data to conclude that downside risks to the labor market have meaningfully diminished.
“If the good labor market news of January is revised away or evaporates in February,” Waller said, a rate cut would be appropriate at the March meeting.
The Federal Reserve’s benchmark short-term interest rate currently stands at approximately 3.6%, following three rate cuts late last year. When the Fed lowers rates, borrowing costs for mortgages, auto loans, and business lending often decline over time — though those rates are also shaped by broader financial market conditions.
A Shift From January Dissent
Waller’s comments mark a notable shift from January, when he was one of two governors who dissented from the Fed’s decision to hold rates steady. At that time, he favored further easing to support economic growth.
Now, stronger labor data has complicated the policy outlook. While growth has moderated — the economy expanded at a 1.4% annual rate in the final quarter of last year, down from 4.4% in the fall — the labor market’s unexpected resilience suggests inflationary pressures could persist.
Tariffs Add Uncertainty
Waller also addressed the recent Supreme Court of the United States decision invalidating several tariffs imposed by President Donald Trump.
He suggested the ruling would likely have only a limited impact on economic growth and inflation, and therefore would not substantially alter his policy outlook. While removing tariffs could modestly boost spending and investment, Waller noted that the White House is exploring alternative legal pathways to reinstate duties, maintaining significant uncertainty around trade policy.
That uncertainty complicates forecasting for inflation and business investment — key factors in the Fed’s rate decisions.
A Puzzling Economic Picture
Waller highlighted a broader puzzle confronting economists: the U.S. economy has continued to grow at a steady pace despite minimal job creation over the past year.
He suggested that previously reported job gains for 2025 may ultimately be revised downward — possibly even below zero — creating an unprecedented scenario of economic growth without corresponding employment increases.
“This would be the first time in my career, my life, that I saw an economy growing like this and zero job growth,” Waller said, acknowledging the unusual divergence.
One potential explanation is rising productivity. Since the pandemic, companies have increasingly leveraged technology and operational efficiencies to produce more output with fewer workers. If productivity gains persist, they could help sustain growth without generating inflationary wage pressures.
Political Pressure Mounts
The Fed’s independence remains under scrutiny as Trump has repeatedly urged policymakers to lower interest rates. Following a recent report showing slower economic growth, Trump renewed public criticism of Federal Reserve Chair Jerome Powell, calling for immediate rate reductions.
While political pressure continues, Fed officials maintain that their decisions are guided by data on inflation, employment, and financial stability.
March Decision Hinges on Data
For now, Waller’s remarks suggest that February’s jobs report will play a decisive role in determining the Fed’s next move. If labor market strength persists, policymakers may opt to hold rates steady and monitor inflation trends. If hiring weakens again, a rate cut becomes more likely.
With inflation easing but not fully subdued, economic growth slowing, and trade policy uncertain, the Federal Reserve faces a delicate balancing act heading into the spring.
As Waller put it, the outcome remains evenly balanced — a true coin toss that could shape borrowing costs and market direction for months to come.
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