Fed's March Rate Cut Now a 'Coin Flip'
The likelihood of a U.S. Federal Reserve interest rate cut in March is uncertain following a strong jobs report. Fed Governor Christopher Waller described the decision as a "coin flip." Meanwhile, central banks in Australia, New Zealand, and Canada are holding their rates steady, reflecting global caution.
- The annual inflation rate in the U.S. slowed to 2.4% in January 2026, marking its lowest level since May 2025. Core inflation, which excludes food and energy, also eased to 2.5%, its lowest point since March 2021. - The Federal Open Market Committee (FOMC) held the federal funds rate steady at a range of 3.50% to 3.75% during its January 2026 meeting. This pause followed three consecutive quarter-point rate cuts in the last three meetings of 2025. - The January decision to hold rates was not unanimous; two FOMC members, Governors Christopher Waller and Stephen Miran, dissented, stating they would have preferred a 0.25% rate cut due to a softening labor market. - The upcoming March FOMC meeting is scheduled for March 17-18, 2026. - As of late February 2026, market expectations heavily favor the Fed holding rates steady in March, with the CME FedWatch Tool indicating a 96.1% probability of no change. Current market forecasts anticipate one or two rate cuts later in 2026. - The Reserve Bank of Australia raised its cash rate to 3.85% in February 2026. The Bank of Canada's key interest rate is 2.25%, and the Reserve Bank of New Zealand's is also 2.25%.
