Federal Reserve Governor Stephen Miran said in a new media interview that two more interest rate cuts in the U.S. this year are “realistic.”
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Miran, who was recently appointed to the U.S. central bank by President Donald Trump, said that it’s now “even more urgent to get to neutral rate quickly” given rising downside risks to the American economy. He added that he sees substantial disinflation on the horizon.
The Fed governor also stressed that U.S.-China trade tensions are potentially important for the economic outlook, adding that the central bank “has to think about introduction of a new tail risk.” Looking ahead, Miran projected substantial disinflation coming a year from now, with inflation returning to the Fed’s 2% annualized target within 18 months.
Market Expectations
Miran’s forecast of two more interest rate cuts this year jibes with the market’s expectations. Futures traders are currently betting nearly 100% that the U.S. Federal Reserve will lower interest rates by 25 basis points at its next meeting on Oct. 29.
Futures have also priced in a 95% chance that the American central bank cuts interest rates by 25 basis points at its final policy meeting of the year on Dec. 10. Signs of a weakening labor market within the U.S. have raised expectations for lower interest rates even as inflation remains sticky and above the central bank’s 2% target.
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