Federal Reserve President Stephen Milan speaks with CNBC at the Invest i America Forum on October 15, 2025.
CNBC
Federal Reserve President Stephen Milan and Christopher Waller have given conflicting views on how quickly the central bank should lower interest rates in the face of a weakening labor market and rising geopolitical tensions.
Milan said Thursday that he would seek another 0.5 percentage point cut in interest rates at the Fed’s meeting later this month.
In a speech in New York, Waller advocated a quarter-point rate cut at the October meeting, a position that appears to be closer to the Fed’s consensus.
Taken together with recent statements from other monetary policy makers, the Federal Open Market Committee, which sets interest rates, appears to be on a clear path to further rate cuts, although the extent remains unclear.
“Based on all the data we have on the labor market, we believe the FOMC should cut interest rates by an additional 25 basis points at its October 29th meeting,” Waller told the Council on Foreign Relations. “But beyond that point, I’ll be looking at how strong GDP data meshes with a softening labor market.”
Federal Reserve officials are working in a quandary between persistent inflationary pressures, exacerbated by President Donald Trump’s tariffs, and signs of stagnant employment. Waller is one of the officials advocating an approach in which the Fed considers tariffs as a one-time price increase that does not create permanent inflationary pressures.
Governor Waller suggested two scenarios. One is a scenario in which gross domestic product (GDP) continues to rise and the labor market improves, which would require the Fed to take a more cautious approach to cutting interest rates, and the other is a scenario in which economic conditions worsen and an additional rate cut of up to 1.25 percentage points is necessary.
“What we want to avoid is acting too hastily and reigniting inflationary pressures and undoing the great progress we have made in controlling inflation,” he said. “The labor market has sent us clear warnings recently, and we should be ready to take action if we see those warnings in the coming weeks and months.”
“It should be 50.”
Waller and Milan were both appointed by President Donald Trump. Waller is seen as one of the last front-runners to replace Chairman Jerome Powell when his term expires in May 2026.
In separate remarks, Milan acknowledged that while he believed the current situation required a more aggressive approach, he still expected his colleagues to vote for another quarter-point cut.
“My view is it should be 50 basis points,” he said in an interview on Fox Business. “But I do expect an additional 25 basis points, and I think we’ll probably see three 25 basis point rate cuts this year, for a total of 75 basis point rate cuts.”
One basis point equals 0.01%, so 50 equals 0.5 percentage points. Mr. Millan advocated a half-point rate cut at the September meeting, but the Federal Open Market Committee rejected it by an 11-1 vote.
Chairman Powell suggested earlier this week that a weakening labor market left the door open for further easing. Participants at the September meeting suggested the possibility of two more moves this year, but Millan supported an approach that would cut the federal funds rate by a total of 1.25 percentage points by the end of 2025.
The government shutdown has prevented the publication of most key data points, making the Fed’s job even more difficult.
“It would be very helpful to have economic data to make the necessary decisions,” Millan said. “Certainly you want to examine the economy for signs of slowing inflation or signs of changes in the job market. But without that data, you have to make decisions anyway, and you have to rely on forecasts to do that.”
Milan said economic growth was expected to be “generally OK for most of this year,” but he was concerned about the recent escalation in tensions between the U.S. and China, which he said would support the possibility of a significant rate cut.
The next FOMC meeting will be held on October 28-29, and the market is almost 100% pricing in a quarter point cut.
