The Federal Reserve’s newest governor, Stephen Miran, is advocating for aggressive interest rate cuts based on an economic perspective aligned with former President Donald Trump, but his views are facing skepticism from other economists and Fed officials who question the underlying assumptions.
Stephen Miran, who took leave from his role as head of Trump’s Council of Economic Advisers, was appointed to the Fed Board in September and has quickly made his mark by dissenting in favor of larger rate cuts at recent policy meetings. In October, he backed a half-point reduction instead of the quarter-point cut supported by the majority, just as he did in September, highlighting his divergence from mainstream Fed thinking. His active public engagement, with over a dozen events in his first month, far exceeds the typical pace for new governors and underscores his urgency in promoting his economic agenda.
Miran’s rationale centers on the belief that Trump’s policies, including immigration crackdowns, tax measures, and tariffs, are contributing to a lower neutral rate of interest, meaning the Fed should cut rates more aggressively to avoid stifling growth. He has repeatedly argued that borrowing costs are too high and risk inducing a recession if maintained, while downplaying inflationary pressures from tariffs and suggesting that reduced immigration could ease housing market pressures. In a November 1 interview with The New York Times, he emphasized that keeping policy tight for too long could unnecessarily harm the economy, given his lack of concern about upside inflation risks.
However, Miran’s views have drawn sharp criticism from prominent economists. Former Treasury Secretary Larry Summers described his debut speech as analytically weak, and JPMorgan’s chief US economist, Michael Feroli, found his arguments unpersuasive and incomplete. This pushback reflects broader skepticism about the economic modeling behind Miran’s calls for steep rate cuts, with some analysts questioning the inputs and assumptions he uses to justify his stance.
Within the Fed, Miran’s colleagues have not fully embraced his perspective. Governor Lisa Cook, in her first speech since Trump said he fired her, subtly rejected the idea that lower immigration directly affects housing inflation, focusing instead on labor market impacts. Other Trump appointees, such as Christopher Waller and Michelle Bowman, have not voted for larger cuts, indicating that Miran’s distinct reasoning has yet to gain traction on the rate-setting committee.
In a recent speech on November 7, Miran expanded on his economic outlook, discussing how the growth of stablecoins could increase demand for dollar assets and further lower the neutral rate, reinforcing his case for accommodative monetary policy. He projected that stablecoin adoption could mimic effects similar to past global saving gluts, potentially putting downward pressure on interest rates and necessitating a policy response.
The ongoing debate over Miran’s influence raises important questions about the Fed’s independence and the future direction of monetary policy, with potential implications for economic stability and political dynamics. As the Fed navigates these divisions, Miran’s tenure will be closely watched for its impact on interest rate decisions and the broader U.S. economy in the coming months.
