Federal Reserve Governor Stephen Miran said interest rates are too high and proposed aggressive cuts in the coming months to protect the labor market.

In his first policy speech since being sworn in as governor last week, Miran outlined the reasons why the neutral interest rate—where the policy rate neither stimulates nor burdens the economy—has fallen.

That rate, which was likely overestimated in the past, has also been lowered recently by tariffs, immigration restrictions, and tax policy, Miran said. This means interest rates should be much lower to prevent economic damage, he said.

"The bottom line is that monetary policy is in restrictive territory," Miran said Monday in prepared remarks for an event at the Economic Club of New York. "Leaving short-term interest rates about 2 percentage points too tight risks unnecessary layoffs and higher unemployment."

The Fed's newest official participated in last week's Federal Open Market Committee meeting, where policymakers lowered interest rates by a quarter percentage point for the first time since December, to a range of 4-4.25%. Miran, appointed by President Donald Trump to fill a vacancy on the board, disagreed, preferring a half-percentage-point cut.

Miran wants to cut rates by another 1.25 percentage points at the two remaining FOMC meetings this year, he said Friday. In contrast, the median projection of 19 Fed officials suggests they will cut rates by another half percentage point. (alg)

Source: Bloomberg