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2026-02-20 03:49:59
Federal Reserve Governor Stephen Milan has lowered his expectations for the magnitude of Fed rate cuts this year. In an interview, he stated that recent data shows the U.S. economy is stronger than he previously predicted. The latest data indicates better-than-expected employment and more persistent commodity inflation. Therefore, he no longer believes the Fed should cut rates as sharply as he predicted two months ago. "The labor market is better than I expected in the past few months, and there are signs that commodity inflation is becoming more persistent," he added. He further stated that these two factors combined would allow him to retract his December prediction, in which he projected interest rates to fall below 2.25% by the end of the year in the Fed's quarterly dot plot. Now, he is more inclined to return to his relatively dovish stance from September, which projects rates to be below 2.75% by the end of 2026. His latest stance implies a full percentage point rate cut this year from the current 3.5% to 3.75% level. Even so, he remains one of the most dovish officials within the Fed, a stark contrast to the majority of officials who expect only a 25 basis point rate cut this year. This interview is noteworthy because it indicates a greater divergence between Milan's views and the economic policy stance of the White House where he previously served.
