By Nicole Goodkind

The White House wants lower rates. The Federal Reserve just got a week's worth of reasons not to deliver them at its March meeting.

President Donald Trump has consistently called for the Fed to cut rates, even though inflation has remained above the central bank's 2% target level. Kevin Warsh, Trump's nominee to replace Jerome Powell as Fed Chair in May, has also called for lower interest rates.

But January payrolls rose 130,000, wage growth firmed and the unemployment rate ticked down to 4.3%. Inflation is still running close to 3%. And in speech after speech, voting Fed officials made clear they are in no rush to ease further. Taken together, the message is clear that the bar for another rate cut has moved higher.

Trump celebrated the jobs report on Wednesday by arguing the U.S. should be paying "MUCH LESS" on its borrowings, writing on social media that lower rates would save at least $1 trillion a year in interest costs. But strong growth and stable hiring aren't conditions that typically prompt a central bank to accelerate easing, particularly when inflation has been above target for nearly five years.

Cleveland Fed President Beth Hammack said this week that rates could remain on hold "for quite some time," arguing policymakers shouldn't try to fine-tune policy while inflation risks remain. Dallas Fed President Lorie Logan, meanwhile, warned that policy may already be near neutral and said she is more concerned about inflation staying stubbornly high than about labor-market weakness.

Gov. Lisa Cook, taking an unusually firm position, said that inflation progress "essentially stalled" in 2025 and that the longer it remains elevated, the greater the risk it becomes embedded in expectations. Inflation hasn't been below 2% since early 2021.

Kansas City Fed President Jeff Schmid, who isn't a voting member this year but dissented against prior cuts, suggested structural labor shortages mean even modest job growth could push unemployment lower over time.

For much of last year, the Fed's debate centered on whether the labor market was softening and whether precautionary cuts were needed to prevent a sharper slowdown. January's data complicate that argument.

The unemployment rate fell even as participation rose. Wage gains picked up and revisions were relatively modest. Economists at BNP Paribas called the report "clearly strong," arguing it reinforces Powell's view that slower payroll growth reflects structural labor supply changes like demographics and immigration, rather than cyclical weakness.

Gov. Stephen Miran, a recent Trump appointee, offered a different perspective, in line with the White House's views. He argued on Wednesday that supply-side forces like cooling shelter inflation, deregulation and AI-induced productivity gains could allow inflation to fall sharply this year even as growth remains solid. In that scenario, monetary policy could accommodate without reigniting price pressures.

But that outlook requires confidence in future disinflation. Personal-consumption expenditures (PCE) inflation -- the Fed's favorite measure -- remains near 3% and core goods prices have firmed as tariff effects work through the system. Core services inflation has moved sideways. Several officials noted that after nearly half a decade above target, cutting again without clearer progress would look premature.

Friday's consumer-price index (CPI) report now takes on added importance, as the Fed no longer appears to see the same urgency to cushion the labor market as it did last year.

But the administration's argument, that the economy is booming, is also one of the Fed's strongest reason to wait. A central bank facing solid growth, stable unemployment, and inflation hovering near 3% doesn't typically rush to ease.

There is still one more jobs report and more inflation data due before the Fed's March 17-18 rate-setting meeting. If inflation resumes on a clear downward trajectory, or if hiring weakens, cuts could return to the table. But this week's data and rhetoric moved the center of gravity in the opposite direction and for now the Fed appears to be on pause, not just for its meeting next month, but in the months beyond as well.

Write to Nicole Goodkind at nicole.goodkind@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 12, 2026 15:59 ET (20:59 GMT)

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