The Fed: Interest Rate Policy Under the Spotlight, a Cut Potential in December
Fed Governor Stephen Miran emphasized in an interview with Yahoo Finance that current US monetary policy is too tight and could pose risks to the economy, particularly the labor market.
Miran stated that the current federal funds rate target range of around 3.75%–4.00% is above the ideal neutral level, and that a rate cut in December would be reasonable barring a major surprise.
Meanwhile, at the previous meeting, the Fed did indeed cut by 0.25% (25 basis points), but Fed Chairman Jerome Powell emphasized that further cuts were not warranted due to lingering uncertainty in economic data and a yet-to-be-fully-stabilized inflation stance.
In the meeting recording, Fed officials noted that risks to the labor market were increasing, although inflation remained a key concern.
Miran's statement signaled to the market that the Fed has room to cut interest rates, which, if confirmed, would be positive news for safe-haven assets like gold.
However, a cautious approach with incomplete data, particularly due to the US government shutdown that prevented the publication of official statistics, leaves the decision on a rate cut shrouded in uncertainty.
For investors, this presents both opportunities and risks: the possibility of a rate cut occurring, and the risk of inflation or employment data surprising to the upside, leading the Fed to a hawkish turn.
Although Miran supports faster and more aggressive rate cuts than his colleagues, many Fed officials remain cautious, emphasizing that inflation remains too high to justify a major rate cut. (CP)
Source: Newsmaker.id
