Internal divisions in the Federal Reserve intensify, Milan throws out new logic for cutting interest rates: easing regulations under Trump is the reason.

U.S. President Trump's appointed Federal Reserve Director Milan last year stated that the Trump administration's deregulation agenda provides another important basis for further interest rate cuts by the Federal Reserve. Milan, speaking at an event in Athens on Wednesday, said: "I believe that the deregulation measures currently being vigorously pursued by the United States will significantly boost market competitiveness, labor productivity, and economic potential growth, helping the economy achieve faster growth and not increase upward inflation pressure." Milan is currently on unpaid leave from his position as senior White House economic advisor to President Trump, serving at the Federal Reserve. Since joining the Federal Reserve in September last year, he has repeatedly called for the Federal Reserve to quickly implement a series of significant interest rate cuts, and has bluntly stated that the current monetary policy stance is unnecessarily constraining the economy. Milan cited several supporting factors for his interest rate cut proposal, including his prediction that housing inflation will gradually decline, and his undervaluation of the so-called "neutral rate" (the level of interest rates when Federal Reserve policy neither stimulates nor suppresses the economy). Regarding the impact of deregulation, he said: "This factor will provide support for further monetary policy easing. If its role is ignored, current policies may fall into unnecessary contraction." Milan stated that according to the Trump administration's estimated pace of deregulation progress in the first half of 2025, 30% of regulatory restrictions in the Federal Regulatory Code will be removed by 2030. He emphasized: "Overall, I believe that the large-scale deregulation measures to be implemented in 2025 will continue to advance at least for the next three years, which will have a strong positive impact on productivity and help to suppress price increases. Ultimately, this trend should prompt monetary policy to take a more accommodative stance." It is reported that Federal Reserve officials have cut the benchmark interest rate three times in the last few months of 2025, with a cumulative decrease of 75 basis points, but have hinted at a pause in action at the next meeting on January 27-28. Currently, there are clear differences among Federal Reserve policymakers regarding inflation and employment prospects. Some officials are concerned about signs of weakness in the labor market and support further interest rate cuts, while others believe that the inflation rate continues to be above the Federal Reserve's 2% policy target and advocate for a cautious approach to future rate cuts. Criminal Investigation Controversy During the question-and-answer session after the speech, Milan also mentioned the criminal investigation by the U.S. Department of Justice into the Federal Reserve and Chairman Powell, stating that he believes this will not have a substantial impact on the inflation outlook. Last week, the Federal Reserve received a subpoena from the Department of Justice, facing the risk of criminal prosecution, prompting a strong response from Powell. It is reported that this investigation is related to the renovation project at the Federal Reserve's Washington headquarters and Powell's testimony to Congress last year regarding the project. When asked whether Milan agrees with Jamie Dimon, CEO of JPMorgan Chase, who believes that this investigation could undermine the Fed's independence and ultimately increase inflation expectations and market rates in the long run, Milan responded, "I do not agree with this view. I believe that the trend of inflation is developing in a positive direction, the overall path is as expected, and the operation logic of various sub-indicators is becoming more reasonable. As for these types of investigations, they are just irrelevant noise." Milan was also asked about the statements of several major central bank governors from around the world, including the European Central Bank, the Bank of England, and the Bank of Canada, who issued statements supporting Powell after the subpoena incident. Milan said, "I believe that it is inappropriate for central bank officials to intervene in non-monetary policy affairs in their own countries, and it is even more inappropriate to interfere in the affairs of other countries. My statement is only this."