Fed's Waller says rate cut in March is a 'coin flip' following a strong
US jobs report
[February 24, 2026] By
CHRISTOPHER RUGABER
WASHINGTON (AP) — Federal Reserve governor Christopher Waller said
Monday that solid job gains in January could mean the central bank can
skip a rate cut at its next meeting in March, a decision that would
likely spur further attacks by President Donald Trump.
At the same time, Waller said last month's pickup in hiring, when
employers added a more-than-expected 130,000 jobs, could have been a
one-time gain. He said he would need to see a similarly positive report
next month to conclude the job market, which he noted was very weak in
2025, is improving.
Waller's hedging is a notable shift from January, when he was one of the
two Fed governors to dissent against the central bank's decision to hold
its key rate steady after three rate cuts at the end of last year. The
decision left the Fed's short-term rate at about 3.6%.
When the Fed reduces its rate, over time it can lead to cheaper
borrowing for mortgages, auto loans, and business loans, though those
rates are also influenced by financial markets.
Waller also said that the Supreme Court's decision to strike down many
of Trump's tariffs would likely have only a limited impact on the
economy and inflation, and therefore wouldn't affect his view on rates.
The ruling could have “a positive impact on spending and investment,” he
said, but “how large the impact may be and how long it could last is
unclear.”
Waller also noted that the White House is seeking to reimpose the
tariffs using other laws, creating “considerable uncertainty over to
what extent tariffs will continue.”
If February's jobs report is similar to last month's, “indicating that
downside risks to the labor market have diminished, it may be
appropriate” to keep the Fed's short-term rate “at current levels and
watch for continued progress on inflation and strength in the labor
market," Waller said in remarks to a conference held by the National
Association for Business Economists.
“But if the good labor market news of January is revised away or
evaporates in February,” he continued, “a cut should be made at the
March meeting."
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Federal Reserve Board of Governors member Christopher Waller poses
for a photo on May 23, 2022, in Washington. (AP Photo/Patrick
Semansky, File)
 “As things stand today, I rate these
two possible outcomes as close to a coin flip,” Waller added.
The Fed governor also addressed a conundrum many economists have
identified about the current economy: Growth is relatively solid,
yet employers added few, if any, jobs last year. Waller said he
thinks even the meager gains reported earlier this month for last
year will be eventually revised to below zero.
“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. "I
don’t even know quite how to think about this.” He added that hiring
could pick up this year and largely resolve the contradiction.
Another explanation could be higher productivity, stemming from the
pandemic, as companies learned to produce more with fewer workers.
Trump attacked the Fed on Friday after the government reported that
the economy grew more slowly in the final three months of last year
than in the summer and fall. Growth slowed to an annual rate of
1.4%, down from 4.4% in the fall.
“LOWER INTEREST RATES,” Trump posted. “'Two Late' Powell is the
WORST!!" he added, misspelling his usual nickname for Chair Jerome
Powell, who he has referred to previously as “Too Late.”
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