Federal Reserve governor Christopher Waller stated that officials could continue lowering interest rates in increments of a quarter-percentage-point to bolster a weakening labour market. However, Stephen Miran maintained his stance advocating for a larger reduction. Waller commented during a Bloomberg Television interview on Thursday (Friday AEDT) that a cautious approach is preferable to avoid missteps, suggesting a 25-basis-point cut followed by a period of observation.
These comments follow Fed chairman Jerome Powell’s signal earlier in the week, indicating that officials are likely to lower borrowing costs by a quarter point at their meeting later this month. Miran, who is currently on temporary leave from his role as chair of the White House Council of Economic Advisers and serving a temporary term as a Fed governor expiring in January, reiterated his call for a more substantial, half-point cut in a separate interview on Fox Business.
Miran repeated his concern that the recent increase in US-China trade tensions poses greater downside risk for the economy, necessitating rapid monetary policy easing. He stated that maintaining restrictive monetary policy in the face of such economic shocks would materially increase the negative consequences. While Miran would favour a half-point cut at the October 28-29 meeting, he acknowledged that officials are likely to opt for a quarter-point reduction, mirroring the September decision.
“I think that we are probably set up for three 25-basis-point cuts this year,” Miran said. Waller voted with the majority to lower the central bank’s benchmark rate by a quarter point last month, bringing the target range to 4 per cent to 4.25 per cent. Miran was the sole dissenter, advocating for the larger half-point cut.
