Fed’s Miran Sees Strong ADP Data as Green Light for December Rate Cut

Federal Reserve Governor Stephen Miran said the latest ADP employment report was “a welcome surprise,” highlighting that the U.S. labor market remains resilient despite broader economic uncertainty and the lingering threat of a government shutdown.

Miran noted that current interest rates may now be higher than needed, suggesting that a rate cut in December would be a reasonable step if inflation continues to ease. He emphasized that both supply and demand dynamics are shaping the outlook, with steady job creation offering room for policy adjustment.

The Fed official also cautioned that renewed uncertainty over trade tariffs could weigh on growth, warning that if tariff-related income disappeared, it would likely influence future monetary decisions. Still, he expressed confidence that the U.S. economy retains strong fundamentals and said he expects additional investment demand to emerge over time.

On inflation, Miran struck a more optimistic tone than some of his colleagues, pointing to disinflation in shelter costs as a sign that overall price pressures are easing. He added that the central bank’s policy stance remains somewhat restrictive and carries potential risks if held too long without adjustment.

The U.S. dollar remained broadly steady following the remarks, gaining ground against the Japanese yen but slipping slightly versus the euro and Canadian dollar. Investors interpreted Miran’s comments as a sign that the Fed is preparing to pivot toward a softer monetary stance, potentially marking the beginning of a shift after a prolonged tightening cycle.

Most analysts believe Miran’s remarks could set the tone for the Federal Reserve’s upcoming meetings, as policymakers weigh the balance between supporting growth and maintaining price stability. A rate cut in December would mark a significant policy shift, signaling the Fed’s confidence that inflation is cooling without jeopardizing employment gains. Markets are likely to watch upcoming consumer price and retail sales data closely, as stronger evidence of easing inflation could reinforce expectations that the central bank is ready to begin a gradual pivot toward looser monetary conditions.