You read yesterday about the Federal Reserve Bank presidents calling for a pause on rate cuts in December and criticizing the recent rate cut. In Washington, D.C., Federal Reserve Board Governor Stephen Miran is calling for deeper cuts to rates to avoid a recession. Miran recently made the case that a neutral rate is much lower than the Fed’s current Fed Funds Rate of 4.0%. He recently said on an interview with Bloomberg:
The Fed is too restrictive, neutral is quite a ways below where current policy is. Given my rather more sanguine outlook on inflation than some of the other members of the committee, I don’t see a reason for keeping policy as restrictive.
He continued:
When you have a series of seemingly uncorrelated credit problems that had been masked for a while and then suddenly come to light, it tells you something about the stance of monetary policy. The longer you keep policy restrictive the more you run the risk that monetary policy itself causes a downturn in the economy,” Miran said.
Action Line: The Fed’s course is not certain. Your Survival Guy is not in the interest rate prediction business, and doesn’t recommend it for you. It’s best to build an investment plan you’re comfortable with, no matter what direction interest rates go. When you want to talk about a plan, email me at ejsmith@yoursurvivalguy.com. And click here to subscribe to my free monthly Survive & Thrive letter.
