Fed's Stance on Monetary Policy#
Federal Reserve Governor Stephen Miran stated on Monday that the central bank should not change its monetary policy based on short-term events, such as the ongoing conflict between the US and Israel in Iran. He emphasized the importance of waiting for complete information before altering the Fed's outlook.
Impact of Middle East Conflict#
The conflict in the Middle East has led to a significant increase in oil prices, which could potentially raise inflation and negatively impact economic growth and the labor market. Despite this, Miran maintained that his forecast of four interest rate cuts in 2026 remains unchanged.
Recent Fed Decisions#
The Federal Reserve recently decided to keep its benchmark interest rate steady for the second consecutive meeting, citing increased economic uncertainty due to the war. Fed Chair Jerome Powell highlighted the need for more progress in reducing inflation. Miran, however, disagreed with this decision and advocated for a quarter-point rate reduction.
Future Rate Adjustments#
Earlier on the same day, Austan Goolsbee, President of the Federal Reserve Bank of Chicago, mentioned that the central bank might either raise interest rates or resume rate cuts, depending on how the conflict influences the economy. He noted that if inflation remains stable, multiple rate cuts could be possible this year, but if inflation escalates, a rate increase might be necessary.