Newsquawk Analysis: Where does the Fed stand?

Analysis details (13:10)

Given the Federal Reserve is now on blackout, ahead of the next confab on March 18th, now seems a good time, and chance, to recap where we currently stand, given the current macro landscape the Central Bank faces. Breaking it down, the Federal Reserve faces four significant hurdles, with each holding different weights and time horizons.

• 1) Dove dissenters (Waller, Miran). On Friday, both Governors were on the wires, expressing the preference for a further cut. Starting with the influential Waller (speaking before the dismal jobs data), reiterated that he has been concerned about the weak labour market since last June, and he is more concerned about that, than inflation, while other colleagues on the committee are more worried about inflation. He continued to echo this theme, but he did once again repeat if there is strength in the labour market, he would be willing to pare back his rate cut bets, but importantly said “if get a bad jobs number today, and Jan revised down, why would they just sit on their hands?”. Following these comments, the US payrolls report revealed 92k jobs were shed in February, which suggests that Waller may vote for a 25bp reduction at the March confab. Miran explicitly said he hopes Fed votes to cut next FOMC meeting, and will be a dissenter if not, and added neutral is like 2.5-2.75%, which will likely be his long-run SEP. While not a current dissenter, Bowman still supports 75bps in cuts this year, and after the dismal NFP report, said that the labour market could use more support from Fed policy.


• 2) The rest of the voting members are likely to want to leave rates unchanged, with many focusing on the inflation side of the mandate. Hammack (2026 voter) sees no imminent need to change the stance of monetary policy in an economy where inflation is still “too high”; Goolsbee (2027 voter) remarked non-tariff inflation has been disturbingly high; Williams (voter) said if inflation ebbs, further reductions in policy rate will eventually be warranted, and Collins (2028 voter) said to cut rates again, need to see clear evidence inflation ebbing


• 3) Trump’s demand for lower rates. Since the President has taken office, he has continually demanded the Fed cuts rates more aggressively and taken aim at “Too Late” Powell. However, given the ongoing Middle East war, will it give Powell et all, a reprieve from his usual tirade? In all honestly, probably not, but the Chair will likely hope for different!


• 4) Middle East war. The conflict has seen oil prices soar with energy prices topping USD 100/bbl which is almost certainly going to have inflationary impacts, but the extent of the impact largely depends on how long the war lasts - which will be a key piece of information for policy decisions. Note, Fed Governor Waller said that it is not going to be a big factor down the road, and he suggested it is unlikely to cause sustained inflation, and when thinking about policy, said this is something we're going to have to put off for now. He added, there will be a spike in gasoline prices, but it is unlikely to cause sustained inflation. Although, Goolsbee (2027 voter) said oil shocks can lead in the stagflationary direction, and stagflation is a worst-case scenario for central banks.

Overall, the Fed is widely expected to hold rates next week, albeit with a couple of dissents, but that is far from the full picture. The meeting is also accompanied by the latest SEPs, albeit likely clouded but the current environment. While the Middle Eastern conflict is unlikely to have much impact on this decision, money-market pricing has moved hawkishly, with the first 25bps cut now priced in by October, vs. September post-payrolls. The key concerns will continue to reside around the labour market/inflation debate in the Committee and any commentary about policy responses in wake of the surge in oil prices.

09 Mar 2026 - 13:10- ForexResearch Sheet- Source: Newsquawk