Stephen Miran Calls for Aggressive Fed Rate Cuts

Stephen Miran, recently appointed to the Federal Reserve Board of Governors by President Donald Trump, has broken his silence with a strong call for deeper interest rate cuts. Speaking at the Economic Club of New York on Monday, Miran argued that the Fed’s policy rate should fall to the “mid-2% range,” nearly two points below the current 4%–4.25%.

The comments highlight a sharp contrast with Fed Chair Jerome Powell. Just last week, the Federal Open Market Committee (FOMC) voted 11–1 for a modest quarter-point cut, the first since 2024. Miran cast the sole dissenting vote, pushing instead for a half-point reduction.

“I view policy as very restrictive,” Miran said. “It poses material risks to the Fed’s employment mandate. I believe the appropriate fed funds rate is in the mid-2% area.”

Miran’s Case for Lower Rates

The Fed typically raises rates to fight inflation and cuts them to support jobs. While it doesn’t directly set mortgage rates, markets closely follow Fed policy and inflation expectations.

Miran argued that current policy is unnecessarily tight, warning that it could lead to layoffs and higher unemployment. He pointed to Trump’s immigration and trade policies as reasons why the Fed’s “neutral rate” — the rate that neither stimulates nor restrains the economy — has shifted lower.

According to Miran, stricter border enforcement and deportations could reduce U.S. population growth from about 1% annually to just 0.4% by the end of the year. Slower population growth, he said, eases pressure on housing and naturally cools the labor market. He expects rent inflation, in particular, to fall below 1.5% by 2027.

On trade, Miran took a different stance from many Fed colleagues who see tariffs as inflationary. He argued tariffs could actually support lower rates by shrinking the federal budget deficit. The Congressional Budget Office estimates tariff revenue could cut the deficit by more than $380 billion per year over the next decade.

Independence and Political Concerns

Miran’s appointment has fueled debate about Fed independence. He remains technically a White House employee on leave, the first in history to hold such dual status. Critics worry that close ties to Trump could lead to politically motivated rate cuts, undermining the Fed’s credibility.

Trump has repeatedly pressed the Fed for lower rates, often criticizing Powell directly. But Miran insisted his decisions are his own.

“I will do the best I possibly can, based on independent analysis of the economy,” he said. “I want to be as transparent as I possibly can be.”

When asked what he would do if Trump pressured him to adopt a specific policy, Miran replied: “I would respectfully listen, consider the arguments, and then make up my own mind.”

A Divided Fed

Miran attended his first FOMC meeting within hours of being sworn in, following a contentious Senate confirmation. Despite the political backdrop, he said other Fed officials welcomed him with respect and open debate.

The Fed’s latest “dot plot” shows just how divided policymakers are: one member projects a rate hike later this year, while another favors the equivalent of five quarter-point cuts. Miran confirmed that he is the dovish member calling for faster, deeper reductions — specifically, 50 basis points across three meetings.

“I’m not going to vote for something I don’t believe in, just to create an illusion of consensus,” he said.

Powell, for his part, dismissed the idea of broad support for such aggressive cuts. “The only way to move things around,” he said last week, “is to make strong arguments based on data and your understanding of the economy. That’s all that matters.”