Fed's Myron Signals Three Rate Cuts This Year

Steven Myron, a governor of the U.S. Federal Reserve (Fed), indicated that there is a possibility of cutting the benchmark interest rate by 0.25 percentage points a total of three times this year. Myron had initially supported four rate cuts but noted that at this point, he might only foresee three rate cuts for the remainder of the year. These remarks serve as an indicator for future outlooks on stocks, real estate, and household loan rates, which are influenced by benchmark interest rate decisions.

He suggested that the year-over-year growth in the Personal Consumption Expenditures (PCE) price index could reach close to the Fed's annual target of 2% in a year's time, but assessed that, compared to before the conflict, the energy shock has not altered inflation forecasts for 12 to 18 months out. Myron added that there is no evidence of a wage-price spiral and that long-term inflation expectations remain anchored. He stated it is reasonable to expect core goods prices and shelter inflation to continue falling.

However, Myron pointed out that the conflict has widened the distribution of risks surrounding the baseline forecast, and he criticized attributing the cause of goods inflation to tariffs as unfair and irresponsible.