Trump-appointed Fed governor urges aggressive rate cuts to 2.5% this year

Stephen Miran, a Trump-appointed member of the Federal Reserve Board, urged aggressive rate reductions, arguing that cutting rates to as low as 2.5% this year would better support job growth. In a speech at the Economic Club of New York, Miran said higher rates risk unnecessary layoffs and higher unemployment, signaling a sharper stance than the central bank's majority.

The Fed cut rates by 0.25 percentage point last week, lowering the target range to 4.0% to 4.25%. It was the first reduction since December 2024, and 11 of the 12 policymakers supported the move. Miran was the sole dissenter, arguing for a larger, half-point cut this year. He noted that he did not speak with the president about how to vote and would rely on independent analysis to guide his decisions. He said he would provide a full accounting of his views on Monday.

Miran arrived at the Fed after serving as chair of the White House Council of Economic Advisers. He was confirmed by the Senate on Monday night and sworn in just before the rate-setting meeting began. He fills a term ending January 31, replacing a governor who resigned early. He has said he would take a leave of absence from the CEA rather than resign, a move that drew criticism from Democrats concerned about Fed independence. If told to stay past January, he indicated he would resign.

Fed chair Jerome Powell has warned of rising risk in the economy, saying there are no risk-free paths forward and that it is not obvious what to do next. The central bank remains focused on its dual mandate to curb inflation while supporting job growth, with policymakers signaling two additional rate cuts likely this year.

Economists note that inflation cooled from a peak above nine percent in mid-2022 but has shown signs of picking up again. An August reading indicated that consumer spending rose about 2.9% across categories such as groceries, clothing, auto services and cafes. The Fed has maintained higher rates to cool inflation, even as the labor market shows signs of softening.

Market participants will watch closely for further signals about Miran's influence on the committee as it weighs additional reductions this year, and for any shifts in the dynamic among the rest of the rate setters.