Fed's Waller Calls March Rate Cut a 'Coin Flip,' Hinging on Jobs and Inflation Data

Fed Governor Waller stated the March interest rate decision is a 'coin flip,' entirely dependent on the upcoming February jobs and inflation reports.

This uncertainty stems from conflicting signals: a surprisingly strong January jobs report contrasts with very weak overall job growth in 2025 and inflation that remains stubbornly above the Fed's 2% target.

Waller also signaled that the Fed will 'look through' any temporary price increases from tariff changes, keeping its focus on underlying economic trends.

Federal Reserve Governor Christopher Waller has framed the upcoming March interest rate decision as a genuine toss-up, calling it a 'coin flip'.

This statement places immense weight on the next batch of economic data, specifically the February jobs report and inflation figures. The Fed is currently navigating a complex environment where different signals are pointing in opposite directions, making the path forward uncertain. So, what's causing this indecision?

First, let's look at the labor market. The January jobs report showed a solid gain of 130,000 jobs, which would normally suggest the economy is holding up well. However, Waller urged caution. A deeper look reveals that job growth for all of 2025 was revised down to just 181,000 for the entire year—an average of only 15,000 per month. This paints a picture of an extraordinarily weak labor market. The Fed now has to decide if the January strength was a real rebound or just statistical noise before it disappears.

Second, there's the issue of inflation. While headline inflation is getting closer to the Fed's 2% target, core inflation, which excludes volatile food and energy prices, remains stubbornly high. The latest core Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation gauge, is still running at 3.0% year-over-year. This persistent inflation makes the Fed hesitant to cut rates too quickly, as it could risk letting prices spiral again.

Finally, a recent Supreme Court ruling on tariffs adds another layer of complexity. While this could cause some short-term price fluctuations, Waller has been clear that the Fed intends to 'look through' these effects. The central bank's view is that such one-time shocks don't represent a change in the underlying inflation trend, as long as long-term inflation expectations remain stable. In essence, the Fed is signaling that its decision will be driven by the core story of jobs and inflation, not temporary tariff-related noise.

FOMC (Federal Open Market Committee): The committee within the Federal Reserve that is responsible for making key decisions about interest rates and the growth of the U.S. money supply.
Core PCE (Personal Consumption Expenditures): The Fed's preferred measure of inflation. It tracks the change in prices of goods and services purchased by consumers, excluding the volatile food and energy sectors, to get a better sense of the underlying inflation trend.
NFP (Non-Farm Payrolls): A key economic indicator that represents the total number of paid U.S. workers of any business, excluding general government employees, private household employees, employees of nonprofit organizations that provide assistance to individuals, and farm employees.

Fed's Waller Calls March Rate Cut a 'Coin Flip,' Hinging on Jobs and Inflation Data

Fed Governor Waller stated the March interest rate decision is a 'coin flip,' entirely dependent on the upcoming February jobs and inflation reports.

Waller also signaled that the Fed will 'look through' any temporary price increases from tariff changes, keeping its focus on underlying economic trends.

Federal Reserve Governor Christopher Waller has framed the upcoming March interest rate decision as a genuine toss-up, calling it a 'coin flip'.

FOMC (Federal Open Market Committee): The committee within the Federal Reserve that is responsible for making key decisions about interest rates and the growth of the U.S. money supply.
Core PCE (Personal Consumption Expenditures): The Fed's preferred measure of inflation. It tracks the change in prices of goods and services purchased by consumers, excluding the volatile food and energy sectors, to get a better sense of the underlying inflation trend.
NFP (Non-Farm Payrolls): A key economic indicator that represents the total number of paid U.S. workers of any business, excluding general government employees, private household employees, employees of nonprofit organizations that provide assistance to individuals, and farm employees.