The new Federal Reserve governor calls for aggressive rate cuts, while other officials take a cautious stance

According to the Zhitong Finance APP, Milan, the latest Federal Reserve governor appointed by President Trump, delivered his first policy speech on Monday, calling for aggressive interest rate cuts and clearly stating that he will continue to push for larger rate reductions in future meetings. This stance is highly consistent with Trump's policy demands, but it makes him a "minority" within the Federal Reserve.

In his speech at the New York Economic Club, Milan stated that this year, the United States' tariff policies, immigration restrictions, and changes in tax policies have significantly lowered the so-called "neutral interest rate" (the interest rate level that neither stimulates nor suppresses economic growth), which means that current monetary policy is actually in a severely tight state. He pointed out, "Short-term interest rates are about 2 percentage points higher than the appropriate level, which will lead to unnecessary layoffs and higher unemployment rates."

During his first voting participation at last week's Federal Open Market Committee (FOMC) meeting, Milan proposed a 50 basis point rate cut, but the Federal Reserve ultimately only lowered rates by 25 basis points to a range of 4.00%-4.25%. In his latest economic forecast, he expects a total rate cut of 150 basis points this year to quickly bring the policy rate closer to his estimated neutral level of 2.5%.

He emphasized that this is not a panic-driven action: "If we were to cut rates by 75 basis points or more at once, that would be panic. My point is simply that if we maintain rates above the neutral level for a long time, economic risks will continue to accumulate." Milan also stated that unless there is a significant change in his judgment, he will continue to vote against in future FOMC meetings and will not compromise to create a "false consensus."

In stark contrast to Milan, several other Federal Reserve officials expressed on Monday that they are not in a hurry to further cut rates and emphasized that inflation remains above the 2% target, necessitating caution. St. Louis Fed President Bullard stated that he would support continued rate cuts if the labor market further deteriorates, but only if inflation does not show sustained signs of exceeding the target and long-term inflation expectations remain stable. Cleveland Fed President Mester took a more hawkish stance, believing that the current policy rate is only in a "mildly tight" state, and that cutting rates too quickly could lead to an overheating economy. "This worries me; if we remove restrictions too quickly, the economy could overheat again," Mester pointed out. The latest unemployment rate in the U.S. is 4.3%, close to the Fed's "maximum employment" target, but inflation remains about 1 percentage point above the target and is expected to remain difficult to bring back to target in the coming years. Atlanta Fed President Bostic stated in an interview that he currently does not support further rate cuts because inflation has remained high for a long time, but he will continue to observe future data before making a judgment.

The latest dot plot released last week further reflects the division among decision-makers: out of 19 officials, 10 support a further 50 basis point rate cut this year; 6 officials believe the current interest rate level is appropriate and should not be further cut; 2 support one more 25 basis point cut this year; and 1 believes the rate should remain unchanged from before the cuts. Milan's forecast is the most aggressive, far exceeding the median.

The market generally holds a skeptical attitude towards Milan's aggressive stance. RSM Chief Economist Joe Brusuelas bluntly stated, "I find it hard to believe that current monetary policy is even mildly tight." He pointed out that financial conditions remain loose, and the labor market is close to full employment, and these signs do not support Milan's claim of "highly tight policy."