The newest member of the Fed Board of Governors, Stephen Miran, believes that the current interest rate of 3.75%-4.00% is too restrictive given his inflation forecast. Miran was the only voting Federal Open Market Committee (FOMC) member to call for a 50 bps reduction during the last two meetings.
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“The Fed is too restrictive, neutral is quite a ways below where current policy is,” Miran said in an interview with Bloomberg on Monday.
Miran Issues Recession Warning
Last week, Miran cautioned that keeping rates too high for too long could run the risk of creating a recession in an interview with The New York Times. In addition, Miran voiced his support for a 25 bps cut at the December FOMC meeting, despite Fed Chair Jerome Powell saying that the scenario was far from a “foregone conclusion.”
One more rate cut by year-end is the likely scenario, with CME’s FedWatch tool assigning 70.3% odds of another rate cut and 29.7% odds of an unchanged rate.
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