Recession Risks Rise If the Fed Doesn't Keep Cutting Rates, Miran Says

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Transcript

00:00At the end of that speech at Columbia, you nodded to the fact that recessions are inevitable.

00:04Fed's job is to kind of forestall them as much as they can.

00:07Policymakers' jobs are that.

00:09I'm very curious, when you look at the labor market in particular, the rise that we've seen in the unemployment rate,

00:13that's the kind of rise we've seen customarily before recessions.

00:16How do you assess the risk of there being a recession here in the near term when you look at the labor market, for instance?

00:21So I don't see a recession in the near term, in part because we are adjusting our policy rate by lowering it, which is appropriate.

00:28You know, my view, as I've described, is that a variety of shocks that hit the economy,

00:34you know, including changes to the population growth rate due to changes in the border policy,

00:38have pushed what we call the neutral rate down and that policy needs to adjust downward to reflect that downward shift in neutral.

00:44If we don't adjust policy down, then I think that we do run risks of rising recessions.

00:50I don't think it's too late to prevent that.

00:52And so I think it's important that we keep on adjusting our policy rate down.

00:55But at the moment, it's not my base case, in part because I think that we ultimately will end up continuing to adjust interest rates down.