Fed’s Waller: Strong payrolls could tilt his stance towards March hold

Fed Governor Christopher Waller said in a speech that recent economic data, particularly January’s employment report, came in “substantially stronger” than expected, suggesting labor market risks may have “diminished”. He noted that the initial estimate showed the US economy created more jobs in January than in the previous nine months combined, a development that surprised both policymakers and market participants.

Despite the upbeat signal, Waller cautioned that one strong month does not establish a trend. He emphasized that the Fed will receive additional employment and inflation data before the March 17–18 FOMC meeting, along with updates on job openings and retail sales. Only if February data confirm continued labor market strength alongside progress toward the 2% inflation target would his outlook turn “a bit more positive.”

In that scenario, Waller said his policy preference could “tilt toward a pause” at the upcoming meeting. However, he stressed the need for confirmation before adjusting his stance.

Addressing the recent Supreme Court ruling on tariffs, Waller downplayed its policy implications. He reiterated that tariffs tend to have only temporary effects on inflation and said he focuses on underlying price trends. Following traditional central bank practice, he intends to “look through” tariff-driven price moves, suggesting the ruling is unlikely to significantly alter his view on the appropriate stance of monetary policy.

Full speech of Fed’s Waller here.