Fed Governor Stephen Miran praised the nominee Kevin Warsh and said he is in favor of rate cuts, whereas Federal Reserve Bank of St. Louis President Alberto Musalem said officials should hold off from lowering interest rates further.
- White House National Economic Advisor Kevin Hassett, also praised Warsh, saying he has high regard for his namesake.
- Miran said he dissented against the Fed’s decision this week to hold rates unchanged.
- Musalem said it would be unadvisable to lower the rate into accommodative territory at this time.
Federal Reserve Governor Stephen Miran said he expects Kevin Warsh, President Donald Trump’s pick to lead the central bank, will prove effective in his leadership of the Fed’s monetary policy committee.
“He’s had a long history of convincing people about his arguments, and so I think as a result, he’s going to be treated with a lot of respect,” Miran said Friday in an interview with CNBC.
“I think people are going to find him very persuasive, because at the end of the day, I think a lot of his views are really right, which is lower rates.”
White House National Economic Advisor Kevin Hassett, once touted to be the top choice to be the next Federal Reserve Chair, also praised Warsh, saying he has high regard for his namesake.
“We’re going to put every effort that we have into getting him confirmed as soon as possible, so that we can get the Fed moving in the right direction,” Hassett said in an interview to CNBC.
Divided on Cuts
Miran said he dissented against the Fed’s decision this week to hold rates unchanged because he views underlying inflation as close to the central bank’s 2% target.
Miran and Warsh both wanted a 25 bps cut in the latest FOMC meeting, where Fed eventually decided to keep the rates steady.
However, Federal Reserve Bank of St. Louis President Alberto Musalem said officials should hold off from lowering interest rates further at this time to prevent stoking inflationary pressures.
“With inflation above target and the risks to the outlook evenly balanced, I believe it would be unadvisable to lower the rate into accommodative territory at this time,” Musalem said on Friday in remarks prepared for an event in Rogers, Arkansas.
Musalem said that he could support a lower policy rate if further signs of labor market weakness emerge, provided there are no signs of increased persistence in above-target inflation and inflation expectations remain anchored.
U.S. equities declined in Friday’s pre-market trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down by 0.41%, the Invesco QQQ Trust ETF (QQQ) fell 1%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 0.54%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘extremely bearish’ territory.