Trump appointee to Federal Reserve calls for steeper rate cuts

Stephen Miran, President Donald Trump’s appointee to the Federal Reserve’s Board of Governors, said Monday that the central bank’s target for the federal funds rate should be much lower than its current 4.1% level, staking out a position far from those of his colleagues. In remarks to the Economic Club of New York, Miran, who also serves as a top economic adviser to Trump, argued that sharp declines in immigration, rising tariff revenue, and an aging population all suggest that the rate should be closer to 2.5%. By Miran’s account, projections released last week show that 2.5% is almost a full percentage point lower than the level implied by any of his 18 colleagues on the Fed’s rate-setting committee. This marks an unusually wide divergence within the Fed’s policy-making group.

Those comments come as Miran’s role at the White House has drawn attention: he remains the head of the Council of Economic Advisers while on unpaid leave, a situation that has fueled scrutiny over the Fed’s traditional independence from day-to-day politics. Miran’s term on the Fed’s board expires in January, and he has indicated he would return to the White House after that, though he could stay on the board until a successor is appointed.

It should be clear that Miran’s view of appropriate monetary policy diverges from that of the other committee members, and he framed his stance as a deliberate reorientation toward what he described as a more restrictive policy. He argued that the policy stance is currently holding back the economy and posing material risks to the Fed’s congressional mandate of pursuing maximum employment, a claim grounded in his broader reading of demographic and structural trends.

Miran linked immigration patterns to inflation dynamics, arguing that fewer immigrants would free up more housing and lower rental costs, thereby reducing inflationary pressures. He also highlighted tariff revenues, which he said may top $300 billion a year according to Congressional Budget Office estimates, as a factor that could help shrink the federal deficit, with the implication that a smaller deficit would alleviate some pressure to keep rates high. Over time, Miran asserted, these factors would lessen the need for the Fed to maintain a high benchmark rate in order to bring inflation down, aligning monetary policy more closely with the evolving economic context.

The remarks come at a time when the Fed’s current rate, set at 4.1%, sits amid projections that emphasize a gradual path to inflation control. Miran’s stance adds to a broader conversation about the appropriate tempo of policy normalization and the boundaries of central-bank independence in a highly political environment.