Federal Reserve Milan: No longer believe that the Federal Reserve should cut interest rates sharply as previously expected this year.

Federal Reserve board member Stephen Milan has lowered his expectations for the magnitude of interest rate cuts by the Fed this year. In an interview, he said recent data shows the US economy is stronger than he had previously predicted. Milan stated in the interview that the latest data shows the employment situation is better than his expectations, but commodity inflation is more stubborn. Therefore, Milan said he no longer believes the Fed should cut interest rates as significantly as he had predicted two months ago. "The labor market conditions are better than my expectations over the past few months," Milan said in the interview. "There are signs that commodity inflation is becoming even more stubborn." He added, "Considering these two factors, I am retracting the prediction I made in December last year." In the Fed's quarterly dot plot in December last year, Milan had predicted that rates would fall to below 2.25% by the end of this year. Now he is leaning towards returning to the relatively moderate stance he held in September, predicting that rates will be below 2.75% by the end of 2026. Milan's latest stance means that starting from the current 3.5% to 3.75% rate level, the Fed will cut rates by a full percentage point this year. However, he remains one of the most dovish officials within the Fed, in stark contrast to the majority of officials who expect only a 25 basis point rate cut this year. This interview is worth noting because it indicates a larger divergence between Milan's views and the economic policy stance of the White House where he used to work.