Fed Governor Stephen Miran: A 50 bps cut is ‘appropriate' for December, but at least 25

Economic Outlook - The government shutdown is expected to depress GDP growth during its occurrence, but growth may rebound in the following quarter once the shutdown is lifted [2][3] - The current economic outlook remains largely unchanged despite the shutdown, with the potential for some growth not being fully recovered due to the prolonged nature of the shutdown [2][3] Federal Reserve Projections - The Federal Open Market Committee (FOMC) had projected three interest rate cuts for the year, but recent inflation data has been better than expected, suggesting a more dovish stance may be warranted [5][6] - Labor market data indicates a gradual softening, with new job openings, wages, and jobless claims reflecting continued weakening [6][7] Inflation Data Analysis - Current inflation data is considered backward-looking and may not accurately reflect future trends, as many rely on stale data [8][9] - Market-based core measures of Personal Consumption Expenditures (PCE) are closer to the Fed's target than traditional measures, indicating a potential decline in inflation [11][12] Future Data Expectations - Updated inflation data may take time to be released following the end of the shutdown, with labor market data also expected to be somewhat outdated [13][14] - The focus should remain on forward-looking policies rather than solely on past data, as no significant changes have occurred since the last FOMC meeting [15][19] Economic Performance Indicators - Factors such as tax refunds and depreciation are anticipated to contribute to stronger economic performance in the first half of the next year [16] - The output gap, which compares potential GDP to actual GDP, is crucial for understanding economic growth and may necessitate rate cuts [16][19] Financial Conditions - Financial conditions are viewed as nuanced, with some markets appearing tight, particularly in housing, which is more relevant for economic growth than equity markets [23][24] - The central bank's focus should remain on achieving maximum employment and stable prices rather than solely on financial market conditions [21][22]