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Fed’s Miran Says Trade Uncertainty Makes Rate Cuts More Urgent

(Bloomberg) -- Federal Reserve Governor Stephen Miran said recent trade tensions have increased uncertainty in the outlook for growth, making it more important for policymakers to lower interest rates quickly.

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“There’s now more downside risks than there was a week ago, and I think it’s incumbent upon us as policymakers to recognize that should get reflected in policy,” Miran said Wednesday during an event organized by CNBC. Higher uncertainty around trade policies between China and the US have introduced a “new tail risk,” he said.

“I wouldn’t say that I want even lower rates now than I did a week or a month ago,” Miran said. “However, with the change to the balance of risks, I think it becomes even more urgent that we get to a more neutral place in policy quickly.”

Miran has said he favors lowering the Fed’s benchmark by an additional one and a quarter percentage points by year’s end. The median projection from the Fed’s 19 policymakers was for two more quarter-point cuts in 2025.

On Wednesday, he said expecting two more rate cuts this year “sounds realistic.”

Fed Chair Jerome Powell on Tuesday cemented expectations for a second straight quarter-point rate cut when officials meet later this month. Concerns that slower hiring could spur unemployment are likely to drive the decision, even as inflation remains above the Fed’s 2% goal.

Miran has repeatedly called for looser monetary policy, dissenting against policymakers’ decision to lower the Fed’s policy rate by a quarter-percentage point last month in favor of a half-point cut.