Further rate cuts are warranted, with February’s nonfarm payroll data as the basis!

①In February, the U.S.nonfarm payrollssaw a decrease of 92,000 jobs, with the unemployment rate rising to 4.4%, the highest level since December 2025; ②Federal Reserve Governor Stephen Milan called for further interest rate cuts, arguing that the labor market requires more accommodative monetary policy.

The unexpected negative turn in U.S. non-farm payrolls in February prompted Federal Reserve Governor Stephen Miran (Stephen Miran) to call for further interest rate cuts on Friday.

The latest data shows that U.S. non-farm payroll employment fell by 92,000 in February, compared to an expected increase of 55,000 and a previous increase of 130,000; the U.S. unemployment rate in February was 4.4%, the highest since December 2025, compared to an expected rate of 4.3% and a previous rate of 4.3%. Miran commented that the weak February employment report further strengthens the case for the central bank to lower interest rates.

In a recent interview, he stated that the Federal Reserve should focus more on supporting the labor market rather than worrying about inflation.

“I don’t think we have an inflation problem,” he added: “I believe the labor market needs a more accommodative monetary policy. Moreover, I think it is inappropriate to adopt a slightly tight monetary policy stance rather than a neutral one. I believe a stance closer to neutral is appropriate.”

The Federal Reserve cut interest rates three times consecutively in the fall of last year, lowering the target interest rate range to 3.5% to 3.75%. The consensus among Federal Reserve officials at the December meeting last year was that the neutral level – which neither restrains nor stimulates the economy – is approximately 3.1%, while Miran believes the neutral level should be about one percentage point lower. If Miran’s view prevails, interest rates will remain close to the neutral level, implying there may be two more rate cuts this year.

Miran has consistently argued that persistently high inflation data depends more on how the Department of Commerce and the Department of Labor measure inflation rather than on true underlying pressures.

One factor he mentioned in the aforementioned interview is portfolio management fees, which have increased due to the overall rise in the stock market. Portfolio management fees are typically charged as a percentage of assets, so when the market rises, the dollar value of these fees increases even if the actual rate of these services remains unchanged.

On the other hand, Miran also mentioned the issue of rising oil prices triggered by the U.S.-Iran conflict, stating that he is not concerned.

“Typically, the Federal Reserve does not react so strongly to rising oil prices. Rising oil prices can push up overall inflation, but this is often just a one-time shock,” he said: “Core inflation (excluding energy prices) is a better predictor of medium-term inflation trends than overall inflation.”

Coincidentally, Federal Reserve Governor Christopher Waller also stated on Friday that he does not believe the conflict in Iran will have a lasting impact on inflation. He pointed out that while rising gasoline prices may cause consumers to experience a “price shock” when refueling, policymakers typically overlook such one-off price increases.

However, Beth Hammack, President of the Cleveland Federal Reserve, seemed less optimistic. She stated earlier this week that it is still too early to assess the economic impact of the US-Iran war and explicitly supported maintaining interest rates at current levels for an “extended period.”

Thomas Barkin, President of the Richmond Federal Reserve, adopted a more neutral stance, stating that the Fed’s policy response to the conflict in the Middle East would depend on how long the war continues to affect the US economy.

Finally, since being nominated by U.S. President Trump in September last year as aFederal Open Market Committeegovernor, Milan has voted against every interest rate decision. When asked whether he would cast another dissenting vote, he said: “I hope not, but it depends on my colleagues. I hope we vote to lower interest rates.”

“I will attend the meeting in a few weeks, and after that, I’ll take it one step at a time,” he added.

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Editor/Doris