'It's too early to draw conclusions': Fed board member maintains forecast of four rate cuts
One Fed board governor maintained his forecast of four rate cuts / Photo: Adam Parent / Shutterstock.com
The U.S. Federal Reserve should not form monetary policy on the basis of short-term factors related to the war against Iran, says a member of the Board of Governors of the regulator Stephen Miran, his opinion is published by Bloomberg.
"We should wait for all the information to come in before substantially changing the outlook [on rates]. It's premature to draw clear conclusions about what the situation will look like 12 months out," said Miran, who was nominated to the council by President Donald Trump.
Miran disagreed with the Fed's March 18 decision to keep the interest rate unchanged. Like the president himself, the Trump appointee favors a softer policy and insists that the rate should have been cut by 0.25pc. Recognizing the risk that persistently high oil prices due to conflict in the Middle East could spread to other goods and services over time, Miran said his pre-war forecast of four rate cuts this year remains on track.
Context
As early as February, traders on Wall Street were arguing about how soon the Fed would return to lowering interest rates. And amid the oil shock due to the war with Iran, futures markets now show that investors even allow the possibility of raising rates already this year, writes The Wall Street Journal. For example, the head of the Federal Reserve Bank of Chicago, Austan Goolsbee, did not rule it out in an interview with CNBC on March 23.
"We could return to a period of several rate cuts throughout the year if inflation slows. But I also allow for a scenario where we have to raise rates if things go the other way and inflation gets out of control," Goolsbee said.
Last year, Goolsbee expressed concerns about persistent inflation, opposing the Fed's decision to cut rates in December, the WSJ recalls. However, he supported the decision to keep short-term rates unchanged in January and March of this year. He is not eligible to vote this year, but will return to vote next year, CNBC reports.
This article was AI-translated and verified by a human editor
