Fed wants aggressive rate cuts

NEW YORK, Oct 04 (Reuters): Federal Reserve Governor Stephen Miran again pressed for an aggressive path of rate cuts citing the impact of Trump administration policies on the economy, while other central bank officials made the case for a more cautious approach citing still-worrisome inflation pressures.

“My view is that if policy is out of whack, you should adjust it at a reasonably ... brisk pace,” Miran said in an interview on Bloomberg television. When it comes to the current setting of central bank interest rate policy, “we're not at the point yet where, if you sort of keep it there another day, it's a crisis, but if you keep it there for an extra year, yeah, I think you have…problems on your hands.”

Miran said his belief that monetary policy needs to be much easier than it is now is based on his view that economic shifts largely on the immigration front suggest that the so-called neutral interest rate has declined from where it was. That means that if left near current levels, Fed policy has become more restrictive of growth, Miran said.

Miran spoke on a day the government was supposed to release its latest employment sector report but did not due to a shutdown created by elected leaders' failure to agree on a budget. Miran did not express concern about missing the key data, noting the central bank still has time before its next meeting scheduled for late October.

Miran is the Fed's newest governor and in a highly unusual state of affairs is on leave from a job at the Trump White House. He dissented in favor of a half-percentage-point rate cut at the interest-rate setting Federal Open Market Committee meeting last month.

Then, officials trimmed their federal funds rate target range by a quarter percentage point to between 4.0 per cent and 4.25 per cent as they sought to balance a desire to lower still-high inflation while providing support for a weakening jobs market.

Officials also penciled in further rate cuts and see the interest rate target in the 3.5 per cent to 3.75 per cent range by year's end, with a move to between 3.25 per cent and 3.5 per cent in 2026.