Federal Reserve President Stephen Milan said Friday that the weak February jobs report supports the central bank’s case for further interest rate cuts.
Millan said in an interview with CNBC that the Fed should focus on supporting the labor market rather than worrying about inflation, after the Bureau of Labor Statistics reported Friday that nonfarm payrolls fell by 92,000 jobs.
“I don’t think there’s an inflation problem,” he said on the show “Money Movers.” “I think the labor market could use more monetary policy accommodation. I also don’t think it’s appropriate to have a moderately restrictive monetary policy stance rather than a neutral stance. I think something closer to neutrality is appropriate.”
Following three consecutive quarters of rate cuts in the second half of 2025, the Fed’s key interest rate is now targeted at a range of 3.5% to 3.75%.
If Mr. Milan has his way, interest rates would be near neutral, but he thinks they will be about 1 percentage point below that. The consensus among Fed officials at its December meeting was neutral (a level that neither suppresses nor boosts the economy) at around 3.1%, suggesting two more rate cuts.
Mr. Millan has argued that stubbornly high inflation rates depend more on how the Commerce and Labor Departments measure them than on true underlying pressures.
One factor, he cited, was rising portfolio management fees amid a general stock market rally. Portfolio management fees are often charged as a percentage of assets, so when markets rise, the dollar value of those fees increases, even if the underlying interest rate on those services does not rise.
Milan added that the recent rise in oil prices and the resulting increase in pumping costs related to the Iran war is not as worrying.
“Normally, the Federal Reserve does not react in this way to rising oil prices. Higher oil prices do (up) headline inflation, but they tend to be temporary shocks,” he said. “If you think about core inflation (which doesn’t include energy prices), it tends to be more predictive of what inflation will be over the medium term than headline inflation.”
Milan has objected to every Federal Open Market Committee meeting he has attended since September after President Donald Trump nominated him for governor. For the three rate cuts, he preferred a more aggressive 0.5 percentage point cut to the quarter-point cut approved by the committee. When the FOMC decided not to cut rates in January, Milan said he wanted rates cut by a quarter of a percentage point.
Asked if he would oppose it again, he said: “I hope not, but that’s up to my colleagues. I hope they will vote for reduction.”
Milan was appointed to complete the unexpired term of Adriana Kugler, who resigned in August 2025. That term expired in January, but Milan continued to serve until a successor was confirmed. President Trump has nominated Kevin Warsh to ultimately replace current Federal Reserve Chairman Jerome Powell, whose term ends in May.
“I’ll be attending a conference in a few weeks, but then I’ll take it one day at a time,” Millan said.
