Fed Governor Miran expects interest rate cut in December

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The newly appointed Federal Reserve governor, Stephen Miran, says the US central bank will cut interest rates in December even though some policymakers without a vote might disagree with this perspective.

Miran’s statement came after he mentioned that he anticipates a rate cut in December unless something unexpected occurs during an interview with Jack Farley on the Monetary Matters podcast.

The Fed governor also acknowledged that, while the distribution of around-the-table changes is underway, the distribution of views among Fed officials varies.

Miran’s remarks follow the Fed’s 25-basis-point rate cut in late October, which lowered the target range to 3.75%–4%. The October cut followed months of elevated inflation, though recent economic data suggest some moderation.

Miran calls for a rate cut in the Fed’s December meeting 

The Federal governor minimized the necessity for more aggressive monetary easing, highlighting that the central bank does not require a 75-basis-point cut and does not need to make up for previous cuts.

When addressing economic conditions, Miran described the current decline in the labor market as gradual, rather than accelerating. Therefore, based on his argument, the situation does not require urgent emergency actions.

Meanwhile, although Miran expects a rate cut in December, sources have pointed out that the federal governor earlier cautioned that nothing is guaranteed in the end. Still, he shared his belief that the Fed’s decision to continue reducing interest rates is a good idea, possibly even at its final meeting of the year, scheduled for December 9-10.

In another interview, Miran outlined earlier forecasts that suggested the likelihood of three rate cuts in 2025. “Has anything changed since then?” the Fed governor asked.

When reporters asked Miran about the lack of enough official economic data, he responded that there is insufficient information about the economy due to the government shutdown. He further explained that inflation levels have been lower than expected, and the job market remained steady.

On the other hand, sources stated that after several considerations, the Fed decided to lower interest rates by a quarter of a percentage point. This action lowered the target range to 3.75% to 4%. However, Miran was against this move because he wanted a bigger cut, specifically half a percentage point. 

Regarding his aim to secure a neutral policy stance, Miran mentioned that he prefers a policy stance that strikes a balance, supporting growth without pushing it too hard or holding it back.

Fed officials raise concerns about further rate cuts 

Reliable sources have noted that since the recently held policy meeting, several Fed officials have raised concerns about inflation and are hesitant about reducing rates again in December. 

Austan Goolsbee, the president of the Chicago Fed, commented on the matter, stating that he was not sure about the December rate cut. Additionally, Federal Reserve governor Lisa Cook and San Francisco Fed president Mary Daly echoed similar thoughts while delivering their speeches.

On the other hand, Kansas City Federal Reserve president Jeff Schmid expressed his support for maintaining rates unchanged during the policy meeting.

Considering the intense nature of the situation, analysts acknowledged that this situation places Miran in a unique position as he recommends further cuts. This followed his remarks that anything can occur between today and December: new information might be released, there could be surprises, or even the occurrence of unexpected events.

“But unless we receive new information that significantly changes our outlook, I believe it would still be a reasonable choice to continue with our current approach,” the Fed governor added.

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