Fed Governor Myron Says Rising Unemployment Requires Significant Rate Cuts

(New York=Yonhap Infomax) Jin Woo Choi –

Stephen Myron, a member of the U.S. Federal Reserve Board, said on the 25th (local time), "We must recognize that the unemployment rate continues to rise, which is a result of overly restrictive monetary policy."

In an interview with Fox Business Network, Myron stated, "The economy is calling for large interest rate cuts to return monetary policy to a neutral stance as quickly as possible."

He added, "Given the economic outlook, I do not believe the current situation is appropriate. I believe it is right to lower rates quite rapidly."

Myron continued, "I hope the recent labor market data will persuade other committee members to my view. The data calls for continued rate cuts."

He further explained, "Looking at the economic outlook and the committee's dot plot, it is clear that most members are guiding us toward the neutral rate. The only question is the pace. Since I do not see an inflation problem, I believe we should reach that neutral level as quickly as possible."

He also commented, "In my view, almost all inflation is a mirage. It is due to supply-demand imbalances in the housing market and the lagged effects of monetary policy."

Myron warned, "If we do not continue rate cuts, and do not do so at a reasonably fast pace, monetary policy will undermine all these positive developments."

He emphasized, "We need to ease mortgage rates. Some argue that financial conditions are very accommodative because of the stock market, but the key channel through which financial conditions affect the real economy is housing."

He added, "Financial conditions in the mortgage and housing markets are very restrictive. I believe that as we cut rates, these rates will come down."

jwchoi@yna.co.kr

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