23.09.202510:04 Forex Analysis & Reviews: There are voices within the Fed calling for aggressive rate cuts

While the dollar struggles to decide which side to take, a new Federal Reserve official appointed by President Donald Trump laid out his case on Monday in favor of aggressive interest rate cuts, presenting a view that aligns with the president's demands.

In his first policy speech since joining the Fed, Governor Steven Miran argued that the neutral interest rate—the level at which monetary policy neither stimulates nor restrains the economy—has fallen this year due to tariffs, immigration restrictions, and tax policy. According to him, this means current interest rates should be much lower to avoid harming the economy.

Markets reacted immediately. US stock indices hit new record highs, while the dollar came under renewed selling pressure against risk assets. Investors saw Miran's remarks as a signal of further rate cuts in the near future. Clearly, rate reductions could stimulate growth, offset the effects of trade wars, and support corporate earnings. However, some economists expressed concerns about the long-term consequences of such a policy. Lower rates could fuel inflation and weaken the currency, ultimately undermining economic stability. There are also worries that artificially boosting the economy with low rates could mask structural issues and delay necessary reforms.

"Monetary policy is firmly entering restrictive territory," Miran said Monday in a prepared speech at the Economic Club of New York. "If short-term interest rates remain about 2 percentage points too high, this risks unnecessary layoffs and rising unemployment."

Last week, Miran participated in his first FOMC meeting, where policymakers cut rates for the first time since December—by a quarter point to a range of 4.00–4.25%. He dissented, preferring instead a half-point cut.

Before his appointment to the Fed, Miran served as Chairman of the White House Council of Economic Advisers. He did not resign from that role but is currently on unpaid leave. His Fed governorship term expires at the end of January, though it remains unclear how long he can remain in the position.

In last week's published rate forecast, Miran indicated he would prefer cuts totaling 1.5 percentage points this year. "This isn't panic—panic would be a 75-basis-point cut or more," Miran said during a Q&A session after his remarks. "I'm not panicking; I just see risks increasing as the rate remains well above neutral. Unless my view changes, I will keep pressing it. I'm not going to vote for something I don't believe in just to create an illusion of consensus where none exists."

Miran's stance sharply contrasted with other Fed officials speaking Monday: none expressed readiness to support another rate cut at the upcoming October 28–29 meeting in Washington. Three policymakers, who had previously voiced concern about inflation, stressed that the Fed should approach further easing cautiously, as prices still exceed the central bank's 2% target.

EUR/USD technical outlook: At present, buyers must focus on reclaiming the 1.1820 level. Only then can the pair target 1.1850. From there, a move to 1.1882 is possible, but achieving it without support from major players will be difficult. The ultimate target remains the 1.1920 high. In case of a decline, I expect significant buying interest to appear near 1.1785. If absent, it would be better to wait for a retest of 1.1760 or open long positions from 1.1725.

GBP/USD technical outlook: For pound buyers, the immediate goal is to break the 1.3540 resistance. Only this would allow targeting 1.3565, above which progress will be difficult. The ultimate target remains the 1.3605 level. If the pair falls, bears will attempt to seize control of 1.3490. A break there would deal a serious blow to bulls and push GBP/USD down to 1.3455, with the prospect of extending to 1.3415.