The official who has consistently held dissenting views warned: if policies are formulated solely based on current data, it will lead to a "short-sighted" predicament.

Author: Jin Shi Data

Federal Reserve Governor Stephen Miran advocated on Monday for further interest rate cuts to guard against a potential economic slowdown in the future.

In an interview with CNBC, this central bank official insisted that the Federal Reserve should advance rate cuts at a faster pace than the traditional 25 basis points. Similar to his stance during the previous two Federal Open Market Committee (FOMC) meetings, he again advocated for a 50 basis point cut, although he stated that at a minimum, a 25 basis point easing policy should be implemented.

"Nothing is certain. We may receive new data that prompts me to change my view from now until the next meeting," Miran said, "but if no new information leads me to revise my forecast, from a timeliness perspective, I believe 50 basis points is appropriate—as I have consistently argued, but at a minimum, it should be 25 basis points."

Despite Miran's ongoing calls for increased action, the FOMC chose a 25 basis point cut in both September and October. Miran voted against both decisions, but did not receive support from other committee members. Kansas City Fed President Jeffrey Schmid voted against the decision in October, but his reasoning was that he wanted to maintain the interest rate unchanged.

Although the October rate cut decision faced only two dissenting votes, public statements from several officials indicate significant disagreements among policymakers.

Federal Reserve Chairman Powell mentioned these disagreements at a recent press conference and suggested that another rate cut in December is not a foregone conclusion. Some policymakers are hesitant to cut rates based on data showing inflation remains well above the Fed's 2% target, while those in favor of rate cuts are concerned that the labor market may further deteriorate.

Miran pointed out that continuing to halt easing policies would be short-sighted. "If you formulate policies solely based on current data, that is looking backward—because the effects of policy take 12 to 18 months to transmit to the economy. Therefore, current policies must be based on economic forecasts for the next year to year and a half."

During the government shutdown, policymakers found themselves in a decision-making dilemma due to a lack of official economic data. Miran stated that existing data shows both inflation and the labor market have weakened, which should prompt the Fed to at least signal a more dovish policy stance compared to its September forecast (which indicated three rate cuts for the year).

According to the CME Group FedWatch tool, current market pricing shows a probability of about 63% for a third rate cut in December, a probability that has gradually declined since the October Fed meeting.

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