Fed Tightness Debate: Milan Calls for Faster Policy Relaxation as Labor Market Cools and Housing Inflation Eases

On December 15, COINOTAG News reported fresh commentary from Federal Reserve policy authorities, with Governor Milan signaling that policy remains restrictive for the economy. While the inflation outlook is viewed as favorable, he cautioned that the labor market shows warning signs, and housing inflation should ease as rents retreat toward pre-pandemic norms.

As cooling momentum in the labor market persists, authorities expect service-sector inflation to face less upward pressure. Some price drivers, such as portfolio management fees, may reflect statistical quirks rather than widespread price changes.

Milan warned that labor-market deterioration can occur quickly and nonlinearly, noting a policy transmission lag of several quarters. He said, “Experience shows that labor market deterioration can happen quickly, is nonlinear, and is difficult to reverse.” With faster policy relaxation to move toward a neutral stance, liquidity dynamics could influence investor sentiment in the crypto markets.