Federal Reserve Governor Stephen Milan stated in a CNBC interview on Monday that he will continue in his role until Kevin Warsh, nominated by President Trump for Fed Chair, is confirmed. He expects to participate in one more Fed policy meeting before that time. Governor Milan's term on the Federal Reserve Board has already expired.
When asked about the uncertainty surrounding Warsh's confirmation due to opposition from Senator Thom Tillis, Milan acknowledged the uncertainty but said he still expects Warsh to be confirmed. He expressed hope for a swift confirmation, adding that he is eager to take a vacation, ideally before the end of the month.
On the same day, Milan reiterated his call for interest rate reductions. He supports cutting rates by approximately one percentage point within the year to support a cooling U.S. labor market. He stated that unless there are signs that the current surge in energy prices will have more lasting effects, Fed policymakers should look past this factor.
Milan noted that market volatility is to be expected during wartime and that he is hesitant to overinterpret such movements. He expressed that he would only become concerned if he saw evidence of a wage-price spiral or rising inflation expectations, for which there is currently no indication. He emphasized that adjustments to the policy rate today or tomorrow would not impact inflation for several months. Milan projected that inflation would return to target levels within a year.
He highlighted that monetary policy operates with a lag and is not designed to respond to short-term market fluctuations.
Citing market-based indicators, Milan pointed out that despite oil prices rising above $100 per barrel and gasoline prices increasing by more than $1 per gallon, inflation expectations have remained stable. He observed no signs that oil prices have triggered an inflationary shock, nor has he detected other Fed colleagues adjusting their policy stance based on oil price movements.
Milan reiterated his concerns about the labor market, stating that the Fed has the capacity to address them. He noted that wage growth is moderating and that the current level of restraint on labor demand appears inappropriate.
Regarding the Fed's balance sheet, Milan described it as excessively large and expressed a desire to reduce its size. He suggested that the Fed could offset the tightening effects of balance sheet reduction by lowering short-term interest rates, emphasizing the importance of a gradual approach to this process.
Milan also commented that unexpectedly tight financial conditions could impact U.S. economic growth. Rising oil prices might accelerate the cooling of the labor market, and current monetary policy remains in restrictive territory.
He added that private credit does not currently signal economic risks for the United States.
Milan also expressed the view that central banks should not hinder the job creation potential of artificial intelligence (AI).
Since September 2025, Milan has dissented at every FOMC meeting he has attended. On Monday, he maintained his position that the Fed could "gradually ease rates by about one percentage point over the course of a year."
The current target range for the U.S. federal funds rate is 3.5% to 3.75%. Market pricing indicates no expectation for a rate hike or cut before the end of the year.
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