MNI BRIEF: Miran Wants More 50 BP Fed Cuts To Neutral By Dec

Federal Reserve Governor Stephen Miran on Friday called for benchmark interest rates to drop by 50 basis point increments to get close to neutral by December, confirming his projection for year-end rates was the lowest among FOMC members at 2.75%-3%. He also said the Fed should not use its balance sheet to cap longer term rates. 

"I don't see a reason for being so far from neutral at the moment," he said in a CNBC interview, adding he would recommend getting to neutral in 50bp clips in his first public remarks as a Fed governor. "The longer you stay very restrictive the greater the risks build up of significant risks to the employment mandate." 

Tariffs have not been inflationary while the Trump administration's immigration policies and deregulation are putting downward pressure on inflation, he said. Import-intensive core goods have not inflated higher than overall core goods, and there's no trend difference between core goods inflation in the U.S. and abroad, he said. 

Growth should pick up in the second half of the year as uncertainty over trade and tax policies lift, and investment incentives will also push potential growth higher, meaning a net small impact for monetary policy, he said. (See: MNI FED WATCH: Fed On Easing Path As Job Market Risks Mount)

Asked whether the Fed should engage in asset purchases to cap mortgage rates, Miran said: "I don't think it's appropriate for the Federal Reserve to be engaging in credit allocation across sectors." 

He added that he had not spoken with Trump about his monetary policy views ahead of the Wednesday FOMC decision. (See: MNI INTERVIEW: Politics Already Influencing Path Of Fed Policy)