Fed's Miran Dovish, Middle East Risks Not Changing Outlook
Federal Reserve Governor Stephen Miran said it was still appropriate to continue cutting interest rates because it was too early to assess the impact of the war in the Middle East on the US economy. In an interview on Bloomberg TV on Wednesday (March 4), Miran emphasized that developments over the weekend had not led him to change his projections for the labor market or inflation.
This statement came as oil prices surged following US and Israeli attacks on several targets in Iran, prompting investors to lower the probability of an interest rate cut in 2026. Several Fed officials this week assessed that the escalation of the conflict was adding uncertainty to the economic outlook, which some market participants interpreted as a reason for the Fed to maintain its "hold" stance for longer.
Even before the escalation in Iran, several Fed officials had highlighted signs of labor market stabilization and implied a preference for waiting for further confirmation that inflation was moving down toward the 2% target before continuing to cut.
Miran took a different view. He believed that the aggregate labor data still indicated the need for additional support from monetary policy, thus justifying continued interest rate cuts.
The market now awaits the US government's monthly employment report for February, due to be released by the Bureau of Labor Statistics on Friday, which has the potential to be a key determinant of the direction of the Fed's policy expectations in the near future.
Source: Newsmaker.id
