Fed governor Milan: Need to support 50 basis points rate cut has weakened

Mr. Milan, the Fed governor, said the need for a 50 basis point cut in interest rates had diminished as the recent monetary policy adjustment proceeded. Mr. Milan noted that there had been some unusual swings in the inflation data, partly related to the government shutdown. These anomalies signal that the Fed's policy stance should be adjusted in a more accommodative direction. He stressed that there was no risk of a recession in the short term, but argued that the neutral level of interest rates had moved significantly lower, and monetary policy must reflect this structural change. Failure to keep policy rates down to get closer to the new neutral level could increase the risk of a recession. In addition, on the issue of his own tenure, Milan admitted that he was not sure whether he would stay in office. He said: If no successor is confirmed by the end of January, I will tacitly assume that I will continue in office.