Investor sentiment has turned gloomier this week, but even if no economic downturn materializes, progress on inflation should allow the Fed to continue cutting interest rates, Waller said.

The Federal Reserve will head into its March 18-19 policy meeting with the labor market strong overall but showing some potential early signs of weakening, a development that could put the U.S. central bank in a tough spot if inflation remains high and the Trump administration's tariffs add to price pressures.

The U.S. dollar slumped to multi-month lows against major currencies on Friday after data showed weaker-than-expected job growth, reinforcing expectations of multiple Federal Reserve rate cuts in 2024.