25 or 50 bps? Waller, Miran Split on Fed Rate Cut Size Ahead of FOMC

Federal Reserve Governors Chris Waller and Stephen Miran are currently split on the magnitude of the cut that they should make at the upcoming FOMC meeting. This comes as it is now more than likely that the FOMC will make another Fed rate cut, which could impact the crypto market.

Waller Advocates For 25 Bps Fed Rate Cut

Speaking at the Council on Foreign Relations, Waller said he believes the FOMC should lower rates by another 25 basis points (bps) at the October 29 meeting, based on all the data they have on the labor market. This came as he noted that the Trump tariffs have had modest effects on inflation and that inflation is on track towards the committee’s 2% goal.

Therefore, he believes their focus should be on the labor market, noting that payroll gains have weakened this year and that employment may already be shrinking. As CoinGape reported, Chris Waller last week said he believes they should make more Fed rate cuts this year, but cautioned about the pace and magnitude of those cuts.

Meanwhile, the Fed Governor also said that if the labor market continues to soften or even weaken and inflation remains in check, then he believes that the FOMC should proceed to reduce the policy rate toward a neutral level. He believes that a neutral level is about 100 to 125 bps lower than what the policy rate is today.

It is worth noting that the market is currently pricing in the possibility of another 25 bps Fed rate cut at the October meeting, as Waller suggested. There is currently a 94.6% chance of that happening.

Miran Holds A Different View

During a FOX interview, Fed Governor Stephen Miran opined that the FOMC should lower rates by 50 bps at the upcoming meeting. However, he admitted that his colleagues are likely to make another 25 bps cut, as they did last month. It is worth noting that he was the only committee member who dissented in favor of a 50 bps Fed rate cut at the September meeting.

Miran recently urged his colleagues to lower rates quickly amid rising trade tensions between the U.S. and China. He noted that this development creates further uncertainty about the economy’s growth outlook, which is why he believes they need to reach a neutral level as soon as possible.

The Fed Governor had earlier stated that they should make a series of 50 bps Fed rate cuts and then cool off when they reach a neutral level. However, Miran indicated that it is unlikely to happen, stating that he expects two additional 25 bps cuts this year, making a total of 75 bps cut for the year.