Fed's Sole "Rate-Cut Vote" Milan: Labor Market More Dangerous Than Inflation

Caixin News, March 24 (Editor Zhao Hao) — Federal Reserve Board Member Stephen Miran recently stated that it is too early to determine how oil prices will affect the U.S. economy.

Miran maintains his stance, believing that a weakening labor market means the Federal Reserve needs to cut interest rates further. In an interview, he said, “Before adjusting our expectations, we should wait until all the information is in place.”

Regarding the sharp rise in energy prices, he said, “I think it’s still too early, and it’s not realistic to form a clear judgment about the next 12 months.” This is the time frame that monetary policymakers need to focus on.

Miran stated, “Traditionally, you would ‘ignore’ this kind of oil price shock, which means my previous policy judgment has not changed — I previously believed that interest rates should be gradually lowered.”

Last week, the Federal Open Market Committee (FOMC) announced that the target range for interest rates would remain at 3.5% to 3.75%, with officials generally expecting only one rate cut this year.

Regarding last week’s Fed meeting and the latest projections (dot plot), Miran said he has lowered his expectation for the number of rate cuts this year from six to four, while raising his outlook for inflation.

Miran was the only voting member at the meeting supporting a rate cut. He has consistently advocated for a more aggressive rate-cutting path — a stance aligned with Trump’s, but opposed by the majority of current Fed officials.

“I believe the labor market still needs more monetary policy support, which is why I voted against the last meeting,” Miran pointed out. “Inflation risks have indeed increased, but the risk of unemployment is also rising, due to the negative supply shock from oil prices, which is also a negative demand shock.”

He emphasized that the central bank should focus on whether high oil prices will push up inflation expectations and drive wages higher — and in his view, neither has happened yet.

However, some Fed officials are evaluating the possibility that if the oil price shock significantly raises inflation, they may need to raise interest rates at some point in the future.