Federal Reserve Governor Stephen Miran declared on Wednesday, October 15, 2025, that two more interest rate cuts this year are realistic, citing escalating U.S.-China trade disputes and a weakening labor market as key factors. Miran emphasized that renewed uncertainty from trade policies, which began last week, has increased downside risks to the U.S. economy. He noted that the labor market continued to weaken in the first half of 2025, partly due to firms delaying investments amid policy uncertainty, including the passage of a major tax bill referred to as Trump's 'One Big Beautiful Bill'.
Miran revealed that until recently, he believed much of the uncertainty had dissipated after trade deals were settled with major trading partners and the tax bill became law. However, China's decision to renege on earlier agreements made in Geneva, London, and Madrid has altered the growth outlook. "And so I think it's incumbent upon us as policymakers to think about the introduction of a new tail risk. The left tail has become a little fatter, as we might say, and we have to recognize that," Miran stated, highlighting the need for policy adjustments.
The Fed governor proposed additional rate cuts totaling 1.25 percentage points beyond the quarter-point reduction approved in September, aiming to move policy toward a neutral stance. The Federal Open Market Committee (FOMC) is scheduled to meet on October 28-29 and in mid-December, with the CME FedWatch tool indicating a 96.7% probability of a rate cut on October 29 and a 95.8% chance for another cut on December 10. Miran's stance aligns with other Fed officials, such as Michelle Bowman, who also anticipates two more cuts in 2025, and Chair Jerome Powell, who has emphasized balancing labor market risks against inflation concerns.
Background details include the Fed's previous rate cut in September by a quarter-point to 4.00%-4.25%, its first since December, amid what Miran described as the biggest rearrangement of global policy in half a century. The trade rift has intensified with China restricting rare earth exports and the U.S. threatening tariffs up to 100%, fueling market volatility and concerns over business investment. Miran's call for faster cuts has sparked internal debate, with Powell favoring a gradual approach, but market analysts expect further easing to support economic stability.
