On January 7, Federal Reserve Governor Stephen Milan stated that current interest-rate policy is “clearly restrictive” and is placing a tangible drag on the economy. He added that there is sufficient justification for rate cuts of “well over 100 basis points” in 2026. The remarks represent a distinctly dovish stance, standing in sharp contrast to other officials who believe policy is already close to neutral, highlighting widening internal divisions over the economic outlook and policy direction.
From a macro perspective, whether monetary policy has become overly restrictive ultimately hinges on labor-market performance. This week, the U.S. will release a dense set of employment indicators—including ADP, JOLTS, initial jobless claims, and the Non-Farm Payrolls report—effectively a full “labor stress test.” If employment data remains resilient, the case for pausing rate cuts strengthens; if conditions weaken again, voices advocating for more aggressive easing—such as Milan’s—are likely to gain momentum quickly.
For crypto markets, the divergence itself is a meaningful forward signal. Uncertainty around the rate path keeps liquidity expectations highly sensitive to incoming data, amplifying short-term volatility. However, if employment and inflation data jointly point toward expanding policy flexibility, markets may begin repricing the medium- to long-term liquidity environment—providing structural support for assets with monetary characteristics, including Bitcoin.
Bitunix Analyst View:
This is not about a single official’s comments, but about policy divergence converging with critical data. The direction of labor data will determine whether markets lean toward a “rate pause” narrative or begin pricing deeper, earlier easing. For crypto, the key remains whether liquidity expectations show a decisive shift.
