Federal Reserve Governor Stephen Milan continues his defense for a more aggressive Fed rate cut. This is because Crypto Market continues to decline following the initial cuts of the year at last week’s FOMC meeting.
Stephen Miran supports a series of 50 bps FRED rate reductions
The Fed Governor said in an interview with FOX Business that the committee needs to make greater cuts to reach neutral speeds. He further stated that they can get there through a series of 50 basis points (BPS) cuts, recalibrate monetary policy, and then they can cool down afterwards.
This came as Milan once again stated that monetary policy was too restrictive, which made the economy more vulnerable to negative side shocks. In particular, the newly appointed Fed governor was the only person to oppose the Fed rate cut at last week’s FOMC meeting in favour of 50 bases.
Milan mentioned his fellow Fed officials are too concerned about Trump’s tariffs and how they will lead to rising inflation. However, he doesn’t see it that way based on the data, and instead is even more concerned about the downsides of the labour market.
His comments continue Treasury Secretary Scott Bescent, who made a similar statement yesterday Current monetary policy is too restrictive. Bescent also added that he was surprised that Fed Chairman Jerome Powell had no idea of plans to compensate for the Fed rate cuts of up to 150 bps by the end of the year.
Powell gave a speech earlier this week, where he noted that he would cut his expectations and decide on his next step. However, he acknowledged that the labor market slowdown was what prompted him to make last week’s first cut.
Meanwhile, the crypto market has so far reacted negatively to the initial Fed rate cuts. Bitcoin prices have fallen from a peak of $117,000 last week, trading above psychological level. Other crypto prices, including ETH, are declining.
Goolsbee makes more cuts
Chicago Federal President Austan Ghoolsby also gave his views on further Fed rate reductions in the discussion today’s presidency. He said interest rates could drop even further as the risk of stagflation fades.
Goolsbee said the risk of inflation is the most worrying thing in the lasting time. However, he acknowledged that the job market appears to be cooling even as inflation rises.
Speaking earlier this week, Presidents Rafael Bostic and Alberto Musalem also expressed concern over the rise in inflation. Bostic believes there is no need for further interest rate cuts this year as its benefits against inflation are increasing.
Recently, Kansas City Fed President Jeff Schmidt said there may not be a need to cut another Fed rate as he continues to try to overthrow inflation.
As these Fed officials cool their expectations for further interest rate cuts, the probability of a 25 bps reduction at the October meeting fell from 90% to around 83.4% at the beginning of the week. Now there is a 16.6% chance that rate reductions will remain the same at the next meeting.