Fed's Miran sees China trade tensions as a further reason for quick interest rate cuts

Economic Outlook and Trade Tensions - The latest impasse in U.S.-China trade talks poses new dangers to the economic outlook, making the case for rate cuts more urgent [1][2] - China's decision to restrict access to rare earth materials has escalated tensions, prompting President Trump's threat of 100% tariffs on Chinese imports [1] Policy Implications - The current trade dispute increases uncertainty in an already volatile year, with concerns that China is reneging on previously made deals [2] - Policymakers are urged to consider the introduction of new tail risks due to the trade situation [2] Interest Rate Cuts - Miran advocates for an additional 1.25 percentage points in interest rate cuts, on top of the quarter-point reduction approved in September [3] - The Federal Open Market Committee (FOMC) is expected to approve another quarter-point reduction in its upcoming meeting on October 28-29 [4] Economic Vulnerability - A restrictive policy environment makes the economy more vulnerable to shocks, necessitating a shift to a more neutral stance [4]