Fed Signals Possible Rate Cut as Inflation and Jobs Data Cool
Hints of a policy shift are emerging from the Federal Reserve as Stephen Miran signaled that the central bank may be preparing to ease rates before the year is over.
Key Takeaways:
- Stephen Miran signals growing support inside the Fed for rate cuts by year-end.
- Inflation data from OpenBrand points to slower price growth across key categories.
- Weakening labor conditions strengthen the argument for a December policy pivot.
- Economists expect a 25–50 bps reduction if the trend continues into next month.
His remarks, delivered in a series of public statements, strengthened expectations that the Fed could opt for a rate cut of up to half a percentage point in December, marking the first move toward monetary relaxation in months.
Miran pointed to a combination of slowing inflation and weakening labor data as evidence that policy tightening has run its course. He emphasized that unemployment is edging higher and job growth is softening, suggesting that the economy has yet to regain “full employment.” In his view, the data since September consistently supports the case for looser policy, describing monetary easing as “essential” to stabilize growth.
Inflation Indicators Show Encouraging Signs
Recent private data has reinforced that message. According to analytics firm OpenBrand, inflation in sectors such as durable goods and personal care products cooled in October after three consecutive months of acceleration. The data—collected from both online retailers and physical stores—showed prices rising just 0.22%, less than half the September rate. Only communications equipment saw any notable increase.
The slowdown comes at a time when official government reports are still lagging due to the historic U.S. government shutdown, prompting economists to rely more heavily on alternative datasets. Together, the findings suggest inflationary pressures are easing faster than many policymakers expected.
Building Momentum for a December Cut
Miran’s remarks indicate that the debate within the Fed has begun to tilt toward rate reductions rather than further tightening. He characterized a 50-basis-point move as “appropriate”, with at least a 25-point cut on the table if conditions continue to stabilize.
Analysts note that the combination of subdued price growth, cooling employment trends, and rising consumer caution paints a picture of an economy that no longer needs restrictive policy. The December meeting could therefore mark a decisive moment for the Fed as it weighs whether to begin its long-awaited pivot toward easing.
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