Fed Governor Waller: There will be no interest rate cut in March, observe the impact of Trump's tariff war on inflation It will be considered later this year

A senior official from the Federal Reserve recently publicly stated that Trump's tariff policy may bring greater inflation risks. Fed Director Christopher Waller also stated on Thursday that he believes the probability of a rate cut in March is small, but there is still a possibility of further rate cuts later this year. (Background: Fed officials estimate two rate cuts this year, but high uncertainty; U.S. bank: if facing inflation headwinds, Fed Interest Rate may be frozen for two years) The Fed maintained the Interest Rate at 4.25% to 4.5% last month, indicating the need for more time to wait for further changes in inflation and to observe how President Trump's tariff and other policies will impact the economy. Waller: The probability of a rate cut in March by the Fed is small, but possible later this year According to Reuters, Fed Director Waller stated on Thursday (6th) at an event hosted by The Wall Street Journal that he does not believe the Fed will make a rate cut decision at the FOMC meeting scheduled for March 18-19. He thinks it's challenging to grasp inflation data at this stage, especially given the huge uncertainty caused by Trump's economic and trade policies, making it difficult to judge if further rate cuts are necessary. 'I want to see how the February inflation data turns out and further understand changes in tariff policies. If you think inflation is moving towards the 2% target, you can start dropping the Interest Rate, but I don't think it will happen at the next meeting, but at some point later.' Waller mentioned that in the long term, the monetary policy outlook presented by Fed officials at the December meeting last year still seems reasonable. The dot plot released at that time expected two rate cuts this year and next (totaling 1%), reaching a range of 3.25% to 3.5%. Waller believes 'such numbers are fine,' even though the actual results may vary slightly. He further indicated that over time, he still believes that rate cuts will bring good news, as these cuts are to alleviate inflation pressures rather than to address economic weakness. However, Waller did admit that recent data shows a worsening trend of economic weakness and is observing if this will be reflected in broader government data. Moody's warning: Trump's tariff & immigration policies may lead the U.S. into 'stagnant inflation,' forcing the Fed to raise rates Fed officials: Trump's tariff policy brings greater inflation risks Currently, the market and economists are generally concerned that the Fed's efforts to counter tariffs have recently reached a deadlock. Trump's widespread tariff hike policy is expected to boost inflation and may suppress economic growth, leading to growing concerns about the U.S. entering 'stagnant inflation' this year. The impact of Trump's tariff policy on inflation has evidently become a major consideration for Fed officials in their monetary policy decisions. New York Federal Reserve Bank President John Williams stated on Tuesday: 'Based on the information we have today and considering all the uncertainties around us, I do take into account the impact of tariffs on inflation and prices, as I believe we will see some of these effects later this year.' Philadelphia Federal Reserve Bank President Patrick Harker expressed during a speech on Thursday that although inflation has been declining, 'I am concerned about current inflation risks.' However, Waller recently hinted at a more optimistic view of the impact of tariffs, publicly stating on February 17th: 'My basic view is that any tariff imposition will only moderately raise prices, and prices will not rise continuously,' suggesting that he advocates not taking monetary policy measures to address the impact of tariffs. However, Waller also acknowledged that the transmission of this tariff restriction may be more challenging. Because 'it is difficult to offset 25% tariffs from profits,' ultimately leading to higher price costs borne by American consumers. Fed officials estimate that there may be two rate cuts this year Overall, due to the significant uncertainty surrounding Trump's tariff agenda, most Fed officials are cautious about the impact of tariffs on monetary policy. Powell reiterated multiple times during a congressional hearing last month that the Central Bank is 'not in a hurry to cut rates,' thus the market generally believes that the probability of a rate cut by the Fed in March is extremely low. The CME Fed Watch tool shows that there is a 91% chance that the Fed will maintain the Interest Rate in March, with differing bets for May: 49.2% of traders predict another freeze, while 46.6% believe there will be a rate cut, and the probability of a rate cut in June to the 4.0-4.25% range exceeds 48.6%. The market also expects rate cuts in July and October, with the possibility of three rate cuts this year, showing a more optimistic outlook compared to last month. Atlanta Federal Reserve Bank President Raphael Bostic indicated in late February that he supports the Fed pausing rate cuts in March and predicts two rate cuts this year. However, given the high uncertainty due to potential changes in trade, immigration, energy, and fiscal policies, more or fewer rate cuts may occur to ensure that inflation does not suddenly surge. Considering that some of Trump's policies may push up inflation, while other policies like taxation and regulation may promote investment, Bostic believes it is more appropriate to pause rate cuts in the short term and observe the economic trend. Source: CME Fed Watch tool Related Reports: Rate cut plan on hold? Fed officials hawkish 'likely to raise rates to counter inflation reversal' Trump's top economic advisor wants 'regular concerns' about Fed Chairman Powell, strengthening pressure for Fed rate cuts? Fed fears tariff impact on inflation, shouts 'gradual rate cuts,' Fed mouthpiece: balance sheet reduction may slow or pause Wall Street Journal harsh criticism: inflation rises for 3 consecutive months, Trump launches tariff war and calls for rate cuts is a mess 'Fed Director Waller: No rate cut in March, observe the impact of Trump's tariffs on inflation later this year' will be published first on BlockTempo, the most influential blockchain news media.