The Federal Reserve cuts interest rates to bet on an economic recovery. Board member Waller says there is a possibility of 2-3 rate cuts this year.

Federal Reserve Governor Christopher Waller said on Thursday that he would not support a rate cut in March, but believes there is still room for two or even three rate cuts this year. "If all aspects, such as the labor market, seem to be stable, then you can focus on inflation," Waller said on Thursday. "If you think inflation is returning to target, then you can start lowering rates. I won't say at the next meeting, but definitely will look to the future." After cutting rates by one percentage point in the final months of 2024, Federal Reserve officials kept the benchmark rate unchanged in January, with expectations that they will maintain rates at the March 18-19 Washington meeting. Several policymakers have indicated they want to see more progress in lowering inflation before cutting rates again. Waller reiterated his assessment that tariffs may not have a significant impact on inflation. Meanwhile, Atlanta Federal Reserve Bank President Raphael Bostic said on Thursday that the Trump administration's new policies are causing "incredible volatility" in the U.S. economy, making it unlikely that the Federal Reserve will have enough clarity to adopt policies by late spring or summer. Bostic said, "There are many changes happening right now, and it's hard to know exactly where things are heading." He listed a range of issues, including tariffs, trade policy, unpredictable inflation spikes, negative consumer confidence shifts, immigration policy and its impact on the workforce, energy policy, tax policy, federal spending, and geopolitics. "If we get a lot of clear conclusions by late spring or summer, I would be surprised," he said. "We need to be very patient." It is understood that the Federal Reserve announced on January 30 at 3:00 a.m. Beijing time that it would maintain the federal funds rate target range at 4.25%-4.5%. The Fed said that the inflation rate remains "slightly high" and the economic outlook is uncertain. The Fed statement did not include the wording from the December statement indicating that the inflation rate had made progress towards the 2% target. The Fed said that the unemployment rate has remained at a low level and the labor market conditions remain strong; replacing the easing conditions mentioned in the previous statement. The Fed stated that the risks of achieving employment and inflation targets are "roughly balanced," economic activity continues to expand at a healthy pace, and the reduction of the balance sheet will continue at the previous pace, with this policy decision receiving unanimous support. It is worth noting that data released on Wednesday showed that the U.S. added only 77,000 private sector jobs in February, the smallest increase since July 2024, far below market expectations of 140,000 and the previous value of 183,000. ADP Chief Economist Nela Richardson said that policy uncertainty and a slowdown in consumer spending may have led to last month's slowdown in hiring or layoffs, "Our data, combined with other recent indicators, suggests that employers are hesitant to hire when evaluating the future economic environment." As concerns about the outlook for the U.S. economy have intensified in recent markets, this latest data seems to indicate signs of a slowdown in the U.S. labor market. The U.S. non-farm payroll report for February will be released at 21:30 Beijing time tonight. According to Bloomberg's survey of economists, the employment data to be released on Friday is expected to show an increase in employment in February, with the unemployment rate remaining stable.