Fed board member Stephen Millan made critical remarks during the interest rate cut debate as the December meeting approaches.
Milan told Bloomberg TV that he would support a 25 basis point rate cut if the vote was decisive, despite having expressed opposition in two previous meetings in favor of a 0.5 basis point (50 basis point) rate cut.
“If I had the ‘marginal’ votes to secure a 25 basis point rate cut, I would definitely support it. Otherwise, it would do real damage to the economy. That’s not my style,” Milan said.
Milan’s flexible message suggests that a decision on further rate cuts could depend on a very narrow majority vote at the December meeting. Regional Fed presidents, among others, have recently said they cannot afford further rate cuts because inflation remains about 1 percentage point above target.
Millan, who took office in September, opposed two consecutive 25 basis point rate cuts by the FOMC and advocated a deep 50 basis point rate cut in both votes. He argues that the current high inflation rate is not permanent and that the employment data supports accommodative monetary policy.
“If you look at the inflation outlook, there is no need for the current restrictive stance,” Milan said, paying particular attention to the delayed September employment data released yesterday.
Meanwhile, the U.S. Bureau of Labor Statistics (BLS) announced that it has completely stopped reporting the Consumer Price Index (CPI) for October due to the government shutdown. The agency said October statistics will only be published in the November CPI report (when available) because some data cannot be collected retrospectively. The November CPI report will be released on December 18th.
The Fed’s December interest rate decision will be announced on December 11th.
*This is not investment advice.
