Federal Reserve governor Christopher Waller has indicated that his support for an interest-rate cut at the US central bank’s upcoming policy meeting will depend heavily on forthcoming labour-market data. Waller stated that maintaining steady interest rates might be appropriate when the Federal Open Market Committee convenes on March 17-18, particularly if February’s labour market data mirrors January’s positive indicators, suggesting a reduction in downside risks.
However, Waller noted that a revision or evaporation of January’s positive labour market news in February would bolster his previous stance at the FOMC’s last meeting, where he advocated for a 25-basis-point reduction in the policy rate, implemented at the March meeting. Speaking at an event in Washington with the National Association for Business Economics, Waller described the two possible outcomes as being “close to a coin flip”.
In January, Waller dissented from the Fed’s decision to hold its benchmark policy rate steady, expressing his preference for a quarter-point reduction due to signs of persistent weakness in the labour market. The subsequent government employment report for January surpassed expectations, revealing robust job creation and a decline in the unemployment rate.
Waller emphasised that, assuming underlying inflation remains near the 2 per cent target, his assessment of the labour market will be crucial in determining the appropriate policy. He specified that his decision will be data-dependent and focused on the labour market’s health.
