Trump-picked Fed governor pushes for aggressive rate cuts, dissents from latest move

WASHINGTON — Stephen Miran, the Federal Reserve governor appointed by former President Donald Trump, told an audience at the Economic Club of New York on Friday that he favors a far more aggressive path on interest rates, arguing that the central bank should cut the policy rate by as much as two and a half percentage points this year. In a departure from his colleagues, Miran said his stance reflects an independent assessment of the economy and warned that keeping rates high risks triggering unnecessary layoffs and higher unemployment. He described the plan as his best ballpark estimate and signaled a willingness to dissent from the majority if needed to pursue what he sees as a more effective path to cooling prices and supporting jobs.

Last Wednesday, the Federal Reserve approved a quarter-point cut, lowering the target range to 4.00% to 4.25% — the first such reduction since December 2024. The move was supported by 11 of the 12 Fed governors, with Miran the sole dissenter, arguing for a larger reduction, consistent with his pre-meeting comments about taking a bolder view on policy. Fed Chair Jerome Powell and most policymakers have stressed that inflation has cooled but remains a risk, and they projected further cuts this year as labor markets soften. In remarks after the decision, Powell noted rising risk to the outlook and said there are no risk-free paths forward, underscoring the balancing act policymakers face between tame inflation and robust job growth.

The suddenness of Miran’s arrival to the Fed added another layer to the ongoing debate over central-bank independence. Miran was sworn in just before the rate-setting meeting, filling a seat left by a governor who resigned early. He previously chaired the White House Council of Economic Advisers and was confirmed by the Senate on Monday night. His term runs through January 31, and he has said he would take a leave of absence rather than resign from the CEA if the president asked him to remain in the White House post. Democratic lawmakers quickly criticized the arrangement as a potential risk to the Fed’s independence, even as Miran sought to reassure colleagues that his vote would be guided by economic data rather than political considerations.

In a CNBC interview ahead of the vote, Miran said he did not discuss with the president how he would vote or what action he would take. He said the president called to offer congratulations but did not press him to act in a particular way. “He didn’t ask me to do any particular actions,” Miran said, adding that he would rely on independent analysis to assess the economy. He also indicated he did not see material inflation stemming from tariffs currently and stressed that his views were rooted in his reading of the data, not in external pressure.

Powell and other Fed officials have framed the policy path around a cautious approach that aims to avoid reigniting inflation pressures while gradually loosening the policy stance as growth slows and the labor market softens. The Fed’s move to trim rates came as the labor market showed signs of cooling, and policymakers signaled two additional cuts this year in their projections. Powell warned that risks to the outlook remain, including the risk that inflation could flare up again if the economy strengthens too much or if supply-chain pressures reemerge. He has repeatedly stressed that “there are no risk-free paths now” and that the committee will need to respond to evolving data.

The question of how quickly to ease policy has grown more acute as inflation has cooled from its 2022 highs but has not yet returned to the central bank’s 2% target in a clear, sustained fashion. An August reading suggested inflation was picking up in some consumer categories, with spending up 2.9% in areas such as groceries, clothing, auto repair, and food-and-beverage services. The data complicate the task for policymakers who must choose between supporting demand and ensuring that inflation remains subdued. Miran’s position highlights a broader debate on whether large rate cuts are warranted to boost employment or whether a more gradual path is prudent to prevent renewed price pressures.

Miran’s rapid ascent to the Fed’s ranks has intensified scrutiny of the central bank’s independence at a time when political pressures surrounding monetary policy are unusually high. He argued that his tenure would be short by design, a factor that some critics say could influence his willingness to dissent. The Democratic caucus has warned that short tenures and outside-the-viewport appointments could undermine the credibility and stability of monetary policy, but supporters say a diverse set of views strengthens the Fed by reducing groupthink.

As the central bank looks ahead, policymakers projected additional easing this year and signaled that more work remains to align inflation with the authority’s mandate to foster maximum employment while keeping price gains in check. Miran’s call for a 2.5 percentage-point cut would represent a radical departure from the Fed’s current pace and could influence the debate among other governors as they weigh the next moves. Market participants will be watching for any shifts in the Fed’s communications, labor-market data, and inflation indicators that could either reinforce or recalibrate the outlook for policy in the months ahead.

Beyond the rate path, the ongoing case surrounding Lisa Cook, another Fed governor, adds intrigue to the central-bank dynamic. Cook has been entangled in a legal challenge over President Trump’s effort to remove her from the federal bench, raising concerns about how political actions might intersect with federal policy decisions. For now, Cook has remained in place as the lawsuit plays out, and the Fed’s leadership has sought to maintain a steady course even as political headwinds swirl around the institution.

Miran’s defiant stance on policy and his insistence on an independent, data-driven approach will keep him at the center of the debate over the appropriate pace of monetary accommodation. If his views gain traction, the Fed could pivot toward a bolder easing path at upcoming meetings, potentially accelerating the timeline for further rate reductions. Conversely, if data suggest renewed inflation or stronger-than-expected growth, Miran’s dissent may become a defining flashpoint in the broader argument about how to balance price stability with job creation. The coming months will reveal whether the inflation lag has fully cleared and whether the job market can absorb a more aggressive easing strategy.