Federal Reserve Governor Stephen Milan stated that the U.S. central bank risks triggering an economic recession if it does not continue cutting interest rates next year.
"If we don't lower policy rates, I do believe there are risks," Milan said in an interview on Monday. He added that while no immediate economic downturn is expected, rising unemployment should prompt Fed officials to maintain a dovish stance.
"The unemployment rate may have already exceeded expectations. Therefore, the data we have should push for a shift toward more accommodative policy," he noted.
Milan, whose term as a Fed governor ends in January, has advocated for more aggressive rate cuts since joining in September.
Following three rate reductions totaling 75 basis points since September, Milan suggested that the necessity for a 50-basis-point cut at the next policy meeting in late January has diminished, though he remains undecided.
"We're approaching a stage where fine-tuning rather than large cuts may be appropriate," Milan said. "I'm not sure if we're there yet or if a few more cuts are still needed."
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