Unfazed by soaring oil prices? Federal Reserve Board Member Mullan: Further rate cuts are needed, and the February non-farm payroll data is the basis!

The U.S. non-farm payrolls unexpectedly turned negative in February, prompting Federal Reserve Board member Stephen Miran to call for further rate cuts on Friday.

Latest data shows that U.S. non-farm employment decreased by 92,000 in February, compared to an estimated increase of 55,000, with the previous figure at an increase of 130,000; the U.S. unemployment rate in February was 4.4%, the highest since December 2025, versus an estimated 4.3%, and the previous 4.3%. Miran commented that the weak February jobs 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 more accommodative monetary policy. Moreover, I think adopting a slightly tightening stance rather than a neutral stance is inappropriate. I believe being close to neutral is the right approach.”

The Fed had cut rates three times consecutively last fall, lowering the target range to 3.5%–3.75%. At the December meeting, Fed officials generally agreed that the neutral level—neither restraining nor stimulating the economy—is about 3.1%, but Miran believes the neutral level should be about one percentage point lower. If Miran’s view is implemented, interest rates would stay near the neutral level, implying possibly two more rate cuts this year.

Miran has long believed that high inflation data largely depends on how the Commerce Department and Labor Department measure inflation, rather than actual underlying pressures.

One factor he mentioned in the interview is portfolio management fees, which have increased as the stock market overall has risen. These fees are usually charged as a percentage of assets, so when the market goes up, even if the actual fee rate remains unchanged, the dollar value of these fees increases.

On the other hand, Miran also referenced the oil price surge triggered by the Iran-U.S. conflict, saying he is not worried.

“Typically, the Fed wouldn’t react so strongly to rising oil prices. Oil price increases can push up overall inflation, but this is often a one-time shock,” he said. “Core inflation (excluding energy prices) is a better predictor of medium-term inflation trends than overall inflation.”

Coincidentally, Fed Governor Waller also said on Friday that he does not believe the Iran war will have a lasting impact on inflation. He pointed out that while rising gasoline prices may cause consumers to feel a “price shock” at the pump, policymakers usually ignore such one-time price increases.

However, Cleveland Fed President Beth Hammack seemed less optimistic. She stated this week that it is too early to assess the economic impact of the Iran-U.S. conflict and explicitly supported maintaining current interest rates “for quite some time.”

Richmond Fed President Thomas Barkin took a more neutral stance, saying that the Fed’s policy response to Middle East conflicts will depend on how long the war’s impact on the U.S. economy lasts.

Finally, since President Trump nominated Miran to the Federal Open Market Committee in September last year, Miran has voted against rate hikes at every meeting. When asked if he would vote against again, he said, “I hope not, but it depends on my colleagues. I hope we vote to lower rates.”

“I will attend the meeting in a few weeks, and then see how it goes,” he added.

(Source: Caixin Global)