The Federal Reserve Board Governor Stephen Miran advocated for further interest rate cuts on Monday, November 10th, in order to ward off potential economic slowdown risks.
In an interview with CNBC, Miran pointed out that higher-than-expected inflation data and continued signs of weakness in the job market indicate that a third interest rate cut of the year should be made in December. He urged for a 50-basis-point cut at the Federal Open Market Committee (FOMC) meeting scheduled for December.
The Federal Reserve will hold its final FOMC meeting of the year on December 9th and 10th.
Despite the government shutdown leading to a lack of official economic data, Miran explained that “the latest inflation data received is better than expected, which suggests that taking a more gradual dovish stance compared to September is reasonable.”
Federal Reserve officials had forecasted in September that there would be three interest rate cuts this year, each cut being 0.25 percentage points.
Miran further noted, “The latest labor market data shows that the job market continues to develop along a gradually weakening trajectory.”
“At this stage, there is no definitive conclusion. Future data could change my decision-making direction,” Miran stated in the interview, “but if there is no new information forcing me to change predictions, based on the current outlook, I still believe a 50-basis-point rate cut is most appropriate – consistent with my past stance – but at least a 25-basis-point cut should be implemented.”
The Federal Reserve cut interest rates by a quarter of a percentage point in both September and October. Miran advocated for more substantial rate cuts and thus voted against both of these rate cuts.
During the September vote, Miran did not receive support from other committee members.
In October, Kansas City Fed President Jeffrey Schmid also voted against, but Schmid favored keeping rates unchanged. Therefore, although both cast dissenting votes, Schmid and Miran held opposing positions.
This voting outcome highlights the continuing significant divergence within the committee regarding the pace of monetary policy.