Fed Governor Waller says he would support a 25-basis-point reduction in March if January labour strength is revised away or evaporates

Policy bias / rate signalWaller says he dissented in January and favoured another cutWaller says he did this because job gains slowed and downside risks to employment increased amid somewhat elevated inflationWaller says balance of risks in January were weighted toward further policy easingWaller says it may be appropriate to hold policy rate at current levels if downside labour risks have diminishedWaller says it would support a 25-basis-point reduction in March if January labour strength is revised away or evaporatesForward guidanceWaller says he will need to see the February report due March 6 before forming any judgment on labour reboundWaller says before March 17-18 meeting he will get February employment and inflation data, plus job openings and retail salesWaller says February CPI on March 11 and February labour report will be important basis for his judgment on proper policy stanceOutlook for interest ratesWaller notes January policy rate held steady following three 25-basis-point cuts since SeptemberWaller says he favoured another cut in January to bring policy rate closer to a neutral settingTariffs / trade policyWaller says appropriate policy should look through tariff effects on inflationWaller says tariff increases have not affected longer-term inflation expectations and will only temporarily boost inflationWaller says Supreme Court ruling overturning a large share of import tariffs may have a positive impact on spending and investmentWaller notes Administration plans to reimpose at least some tariffs using other lawsWaller says he will look through tariffs if they come downWaller says Supreme Court ruling is unlikely to have a significant impact on his view of appropriate policy stanceLabour marketWaller says January employment report came in substantially stronger than he and most forecasters and market participants expectedWaller notes initial estimate is economy created more jobs in January than previous nine months combinedWaller says 2025 was extraordinarily weak for job creation, weakest outside a recession since 2002Waller notes revised 2025 job gains of 181,000, averaging 15,000 a monthWaller says payroll employment probably fell in 2025, only third year since 1945Waller says decline in net immigration last year significantly lowered labour force growthWaller says unemployment fell last month but is still higher than a year agoWaller says he has concerns jobs report may contain more noise than signalWaller says job gains were concentrated primarily in health care and constructionWaller notes ADP reported 22,000 jobs; Revelio estimated 3,000 new private-sector jobs in JanuaryWaller notes Challenger Gray and Christmas counted 108,000 layoff announcements last monthInflationWaller notes headline CPI inflation came in below expectations for JanuaryWaller says core CPI inflation rose 0.3 percent in January and was up 2.5 percent over 12 monthsWaller estimates January PCE inflation around 2.8 percent over 12 months, with core about 3 percentWaller says PCE inflation has crept up in past few months and is meaningfully above 2 percent goalWaller estimates underlying inflation without tariff effects is close to 2 percent goalGDP growthWaller notes advance estimate of Q4 2025 real GDP growth of 1.4 percent annual rateWaller notes private domestic final purchases increased 2.4 percentWaller expects real GDP to grow above 2 percent over six months after smoothing shutdown effectsWaller notes PCE growth slowed from 3.5 percent in Q3 2025 to 2.4 percent in Q4Balance of risksWaller says risk of substantial downturn in labour market combined with limited risk of higher inflation warranted another cut in JanuaryWaller says key to setting appropriate policy will be his view of the labour marketWaller says he rates the two possible outcomes as close to a coin flip