Member of the Board of Governors of the U.S. Federal Reserve System Stephen Miran said that interest rates are too high now and called for their aggressive reduction in the coming months in order to protect the labor market. This was reported by Bloomberg. Interest rates should be significantly lower in order not to hurt the economy, the official said.

Miran said changes in tax and immigration policy, lower rents, deregulation and import duty revenues are forming a new economic reality that allows the Federal Reserve to cut its key rate by nearly 2 percentage points from current levels, CNBC reported.

"The bottom line is that monetary policy is deep in the restrictive zone," Miran said at a speech at the Economic Club of New York (quoted by Bloomberg). - Keeping short-term interest rates about 2pc above the optimal level creates the risk of unnecessary layoffs and rising unemployment."

It was Miran's first policy speech since his inclusion on the Fed Board of Governors was confirmed by the Senate. He was nominated to the Fed by President Donald Trump. Miran's views diverge sharply from the consensus position of the Fed's Federal Open Market Committee (FOMC), which decides on the rate, where a more cautious approach and a course of gradual and restrained rate cuts over the next few years currently prevail, CNBC noted.

Context

Following a two-day meeting on September 16-17, the FOMC cut the key rate by 25 basis points (0.25 p. p.) - for the first time in 2025. It now stands at 4-4.25%. The Fed's decision fully coincided with the expectations of market participants and economists. As follows from the so-called dot plot published by the Fed, the regulator expects to reduce the rate by another 50 bps this year. And in 2026, it expects a 25 b. p. p. reduction.

Miran was the only one to vote against the FOMC's decision, as he insisted on a 50bp cut immediately, as well as another 1.25bp rate cut before the end of the year.

This article was AI-translated and verified by a human editor

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