Federal Reserve Gov. Stephen Miran says the Fed has a long way to go to help relieve pressure on the economy.
Last week, the Federal Reserve moved to cut interest rates by a quarter-point; however, Miran said the reduction was not nearly enough. The central bank’s interest rate easing was the first rate reduction since December 2024.
Miran joined the Fed’s Board after leaving his role as head of President Trump’s Council of Economic Advisers. During last week’s vote, Miran was the sole dissenting voice in the 0.25% reduction that passed 11-1.
“I view policy as very restrictive, (and) believe it poses material risks to the Fed’s employment mandate,” Miran said during his first speech in his new role.
Miran said the neutral rate of interest, a theoretical rate that is neither too stimulatory nor too dampening on economic activity, is lower than what the Fed currently suggests.
According to Miran, some at the Fed are not fully appreciating how Trump’s policies, such as his tax and spending bill and the administration’s clampdown on illegal immigration, could be placing “strong downward pressure on the neutral rate.”
“I believe the appropriate fed funds rate is in the mid-2 percent area, almost 2 percentage points lower than current policy,” said Miran.
The new member of the Federal Reserve Board of Governors said his first speech is an attempt to persuade his colleagues on the merits of lowering rates much faster, a belief he shares with Trump.
“There’s a reason why policy rates are too high. It’s because there’s been substantial changes in immigration, there’s been substantial changes in tariff revenue, and these need to be incorporated into our economic models because they’re relevant for how monetary policy is set,” Miran said, per CNN.
“That’s how I’m going to approach my time at Federal Reserve: to lay out my economic arguments as clearly and transparently as I can, and hope to persuade people by the force of the economics.”