Federal Reserve Governor Christopher Waller on Monday said that the Fed’s decision on interest rates for March is a coin toss. He further explained that it depends on whether February’s labor market report, due for release in less than two weeks, is similar to January’s strong performance.
Speaking at the 42nd Annual NABE Economic Policy Conference in Washington, Waller clarified that it might be appropriate to hold interest rates steady when the Federal Open Market Committee (FOMC) meets on March 17–18.
“As things stand today, I rate these two possible outcomes as close to a coin flip,” Waller summarized.
According to the CME Group Fed Watch tool, there is already a 96.1% probability that the FOMC will hold interest rates steady next month, with two rate cuts happening in June and December this year.
Why Waller’s Shift Matters
Waller’s change of heart represents a major policy shift. He argued during the last meeting that the FOMC should ease monetary policy because of a weak labor market. Therefore, the short-term interest rate was set at approximately 3.6%.
So, what changed? The January labor market report revealed that employers added 130,000 jobs, which could be a factor. Waller was also quick to point out that this may be a one-time blip and that this month’s numbers may be dissimilar.
Evidently, the Bureau of Labor Statistics and Consumer Price Index data on employment scheduled to be released on March 6 and 11, …
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