Better-than-expected jobs data has Federal Reserve’s standout doves shying away from rate cuts
Surprisingly strong labor market data has the Federal Reserve’s standout doves more willing to stand down from advocating for additional rate cuts.
Governor Christopher Waller said his decision on whether he would be in favor of a rate cut at the Fed’s upcoming meeting in March would be “a coin flip” depending on the jobs market data for February.
“If the labor market data for February are consistent with the stronger job creation and low unemployment rate initially reported in January, indicating that downside risks to the labor market have diminished, it may be appropriate to hold the FOMC's policy rate at current levels and watch for continued progress on inflation and strength in the labor market,” he said in a speech on Monday.
In January, nonfarm payrolls growth of 130,000 came in well above estimates, and the unemployment rate unexpectedly dipped to 4.3%. The unemployment rate had edged down to 4.4% in December.
Prediction markets indicate that the Federal Reserve is seen as a near lock to keep its policy rate unchanged at the March meeting. The prediction market-implied odds of a rate cut in June are a little over 60%.
(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)
Governor Stephen Miran also recently told The Peg that, in the absence of further data, he would probably move up his expectation for the appropriate level of the federal funds rate at year-end by 50 basis points (to 2.625%).
“The labor market came in a little bit better than I came to expect over the last few months,” he said. “There’s been some signs of even more firming in goods inflation.”
Both Waller and Miran dissented from the US central bank’s decision to keep rates unchanged in January, preferring an interest rate cut.
Governor Stephen Miran also recently told The Peg that, in the absence of further data, he would probably move up his expectation for the appropriate level of the federal funds rate at year-end by 50 basis points (to 2.625%).
“The labor market came in a little bit better than I came to expect over the last few months,” he said. “There’s been some signs of even more firming in goods inflation.”
Both Waller and Miran dissented from the US central bank’s decision to keep rates unchanged in January, preferring an interest rate cut.
