Senior official of the Federal Reserve after the FOMC meeting: Powell warns of employment risks, Bostonik calls for patience.

Federal Reserve Governor Christopher Waller said on Friday that he opposed the FOMC's decision this week to keep interest rates unchanged, believing that the latest economic data clearly indicates the need for further rate cuts to avoid excessive constriction on economic activity. Waller pointed out in his statement that monetary policy still remains restrictive, saying, "Economic data convinces me that we need to continue easing policy." This week, Fed officials voted to keep the benchmark interest rate in the range of 3.5% to 3.75% and noted an improvement in the U.S. economic outlook. Waller advocated for an immediate 25 basis point rate cut and was the dissenting vote in this meeting. Waller's dissent primarily stems from his concerns about the resilience of the labor market. He emphasized that the unemployment rate has been rising since mid-last year and job growth has slowed down. He also stated that forthcoming data revisions may show that there was "virtually no growth" in nonfarm payrolls in the U.S. last year. Additionally, Waller heard feedback about layoff plans for 2026 in several company and community surveys, indicating a lack of confidence in future employment expansion among businesses and a rising risk of significant deterioration in the labor market. Regarding inflation, Waller believes that excluding the impact of President Trump's tariff policies, current inflation levels are close to the Fed's 2% target, providing room for further rate cuts. Waller has been calling for rate cuts for the past few months based on the assessment of "moderate inflation + employment concerns," but after the Fed ended its series of three consecutive rate cuts in 2025, he previously stated that there was no urgent need for further easing. Therefore, his sudden dissenting vote this time also surprised the market. In contrast, Atlanta Fed President Raphael Bostic emphasized that inflation is still on the high side, and the Fed should remain patient and hold off on further rate cuts. In an interview on Friday, he said, "We are still in a phase of inflation being too high, so policy needs to be somewhat restrictive." Bostic believes that the downside risks to the job market have significantly eased compared to a month ago, strengthening policymakers' confidence in waiting for more data. Fed Chair Powell also stated this week that the decision to keep rates unchanged had broad support at the policy level, with recent data showing stability in the trend of the unemployment rate and no further deterioration in the labor market. Meanwhile, President Trump announced on Friday that he plans to nominate former Fed Governor Kevin Warsh to succeed Powell as Fed Chair after his term ends in May. Bostic said he has had limited contact with Warsh but heard that he is "very thoughtful and worth engaging with." It is worth noting that this meeting is also Bostic's last FOMC meeting as a policymaker, as he is set to retire officially at the end of February. Against the backdrop of the impending announcement of a new Fed Chair nominee and emerging internal policy differences at the Fed, expectations for the pace of rate cuts in 2026 may further fluctuate.