Fed’s Miran Calls For A ‘Minimum’ Of 25 Bps Rate Cut In December: Report

• Miran added that if the Fed were to determine its monetary policy stance based on currently available data, it would be backward-looking.
• He stated that it would take 12 to 18 months for their impact on the economy to be visible.
• Data from the CME FedWatch tool points to a 62.9% probability of a 25-bps rate cut in December.

Federal Reserve Governor Stephen Miran on Monday reportedly advocated for a minimum of a 25-basis-point rate cut in December.

During an interview with CNBC, Miran also reiterated that the central bank’s rate cuts should be larger than the 25 bps reductions.

“Nothing is certain. We could get data that would make me change my mind between now and then. But failing new information that’s made me update my forecasts, looking out in time, yeah, I would think that 50 is appropriate, as I have in the past, but at a minimum 25.”

— Stephen Miran, Governor, Federal Reserve

During the previous two meetings of the Federal Open Market Committee (FOMC), Miran has voted in favor of 50 bps rate cuts.

Looking Ahead

Miran added that if the Fed were to determine its monetary policy stance based on currently available data, it would be “backward looking,” stating that it would take 12 to 18 months for its impact on the economy to be visible.

“So you need to make policy now based on where you think the economy is going to be a year to a year and a half from now,” he added in the interview.

Data from the CME FedWatch tool points to a 62.9% probability of a 25-basis-point rate cut in December.

Not Everyone Agrees

While Miran has advocated for bigger cuts and still wants a reduction in December, not everyone agrees. Federal Reserve Vice Chair Philip Jefferson said on Friday that the central bank should now “proceed slowly” as it approaches the neutral rate, following the 25-basis-point cut in October.

Speaking at an event in Frankfurt, Jefferson stated that after the 25 basis point rate cuts in September and October, interest rates are now closer to a neutral level than they were before.

Meanwhile, U.S. equities gained in Monday’s midday trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up by 1.3%, the Invesco QQQ Trust ETF (QQQ) gained 1.94%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) rose 0.54%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘neutral’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was down 0.12% at the time of writing.

Also See: Exclusive: Abacus Global CEO Jay Jackson Eyes Billions In AUM, Explains How The Company Plans To Bridge The Valuation Disconnect

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