Stephen Miran says Fed rate cuts urgently needed as trade tensions rise

Federal Reserve Governor Stephen Miran is calling for more and higher interest rate cuts, noting that urgency is key as trade-war tensions between the United States and China ramp up.

Miran’s comments come ahead of an anticipated Federal Reserve policy meeting this October, with the Fed having signaled more rate cuts before the U.S. government shutdown rocked markets.

A fresh focus on the U.S. economy has emerged amid the data blackout and the recent flare in U.S.-China trade tensions.

Miran, who shared his remarks during an interview with CNBC’s Invest in America Forum,  highlighted an urgency in rate cuts as one of the main policy outlook factors amid growing uncertainty. 

In his view, the market currently faces increased downside risks, and it’s incumbent upon policymakers to be alive to this fact. The same needs to be reflected in policy action, he noted.

“I had been operating under the assumption that the uncertainty had dissipated, and therefore I felt more sanguine about some aspects of the growth outlook. Now, potentially, this is back because the Chinese are reneging on deals that were already made,” he told CNBC.

Miran calls for Fed to cut by 1.25%

Notably, Miran is vouching for an additional 1.25 percentage points cut in coming months. That’s on top of the 25 basis points cut the central bank announced following its Federal Open Market Committee meeting in September.

The FOMC’s next meeting is set for Oct. 28–29, with the market highly anticipating a further reduction in the interest rate. Another meeting is set for December, and the expectation is that the Fed will also lower rates.

On Tuesday, Oct. 14, Fed Chair Jerome Powell signaled a more dovish stance, and stocks and crypto alike moved higher.