Federal Reserve Board Governor Michelle Bowman: The growth of stablecoins may long-term suppress the neutral interest rate

Stephen Miran, a Federal Reserve Board member appointed by President Trump, stated on Friday that the growth of stablecoins may exert significant downward pressure on the neutral interest rate over time.

He mentioned that even relatively conservative growth forecasts for stablecoins would lead to an increase in the net supply of lendable funds in the economy, thereby exerting a downward influence on the neutral interest rate. If the neutral interest rate declines, the policy rate should also be adjusted downward to support the healthy functioning of the economy; conversely, not lowering interest rates would effectively equate to tightening policy.

He pointed out that several factors, including changes in immigration policy and tariff measures from the Trump administration, have already caused the neutral interest rate to decline, while the current policy rate is significantly above that level, putting considerable pressure on the U.S. economy