(Corrects headline to show Miran says policy too restrictive, rather than not restrictive)
By Howard Schneider
WASHINGTON (Reuters) -Federal Reserve officials on Monday continued pressing competing views of where the economy stands and the risks facing it, a debate set to intensify ahead of the U.S. central bank’s next policy meeting and in the absence of data suspended due to the federal government shutdown.
In an appearance on the Bloomberg Surveillance television program, Fed Governor Stephen Miran restated the case for deep interest rate cuts that he has laid out since joining the central bank’s Board of Governors in September, and expanded his rationale to argue that buoyant stock and corporate credit markets are no reason to think monetary policy is too loose.
“Financial markets are driven by a lot of things, not just monetary policy,” said Miran, who is on leave from his job as a top economic adviser in the White House, in explaining why he dissented last week against the Fed’s decision to cut rates by a quarter of a percentage point. Miran favored a half-percentage-point reduction.
Rising equity prices, narrow corporate credit spreads, and other factors don’t “necessarily tell you anything about the stance of monetary policy” at a moment when interest-sensitive sectors like housing are less buoyant and some parts of the private credit market appear under stress, Miran said, adding that he still feels Fed policy remains too restrictive and is heightening the risk of a downturn.
Chicago Fed President Austan Goolsbee, in contrast, told Yahoo Finance that he was leery of further rate cuts while inflation remains significantly above the central bank’s 2% target and is expected to accelerate through the rest of 2025.
Goolsbee, who is a voting member of the Fed’s policy committee this year, supported the recent rate cut, but said “I’m not decided going into the December meeting … I am nervous about the inflation side of the ledger, where you’ve seen inflation above the target for four and a half years, and it’s trending the wrong way.”
San Francisco Fed chief Mary Daly, whose turn to vote isn’t until 2027 but who takes part in the policy discussion and debate as all 19 U.S. central bankers do, said that she supported last week’s cut as “insurance” against labor-market weakening.
As for December, she said, she has an “open mind” as she assesses if taking out more insurance is warranted. The Fed could cut again, she indicated, “if we feel that more is needed because we’re getting more signs that the labor market is in a state of precipice of concern … I don’t see that right now.” At the same time, she noted, inflation remains too high; the Fed must make a decision that “balances those risks.”
