Federal Reserve Governor Christopher Waller stated on Friday that he does not anticipate the conflict involving Iran to have a lasting impact on inflation. He noted that while increases in gasoline prices might unsettle consumers, policymakers would disregard any one-time price surges. In an interview on Friday, Waller remarked, "In terms of considerations for our future policy, this is unlikely to trigger persistent inflation. This is one reason we do not focus on energy prices. When we look at core inflation, it provides a better predictor of future inflation trends." He added that core inflation is the measure calculated by excluding the volatile categories of energy and food prices. Waller had previously dissented from the Fed's decision to hold the benchmark interest rate steady in January, indicating that, given signs of persistent weakness in the labor market, he would have preferred a 25-basis-point rate cut. Subsequently, the U.S. government reported non-farm payrolls data for January that significantly exceeded expectations. Fed policymakers are expected to hold rates steady for a second consecutive time at their meeting scheduled for March 17-18. With signs of stabilization emerging in the labor market and the inflation rate remaining above the 2% target, officials have signaled they can afford to be patient when considering further interest rate cuts. The Fed reduced its benchmark rate three consecutive times by the end of 2025, partly in response to indications of labor market weakness. Interest rate swaps linked to Fed policy show traders now expect approximately 35 basis points of rate cuts by year-end, compared to expectations of around 60 basis points late last week.