New U.S. Federal Reserve Governor Stephen Miran, on leave at the central bank from the Trump administration, on Friday defended himself as an independent policymaker after dissenting in favor of steep rate cuts at Wednesday’s policy meeting
Miran, who promised to give a detailed argument for his views in a speech on Monday, voted on policy just hours after joining the central bank. He said he was not given any guidance from President Donald Trump on what to do at the meeting.
“I’m going to give a full accounting for my economic views, and walk through in meticulous detail the economics and the arithmetic behind getting to those numbers,” in remarks in New York on Monday, Miran said on CNBC of his dissent in favor of a half-percentage-point cut at last week’s meeting and his projection that rates should be cut more than a percentage point more by year’s end.
He argues that a near “neutral” rate of interest is now the proper setting for an economy he says has no inflation risk and that will see lower housing costs as strict immigration policies dampen demand for housing.
His views are out of the Fed’s mainstream consensus, which is tilting towards a gradual pace of rate cuts this year out of concern the job market is weakening and despite inflation, some of it flowing from the Trump administration’s tariffs, that is expected to rise at least temporarily through the rest of the year and remains well above the Fed’s 2% target.
NEWCOMER WAS ONLY VOICE FOR A LARGE CUT
“I was the only supporter for a 50-basis-point cut,” Miran acknowledged, adding that he did feel that he “owed the world an accounting for why my views are so different.”
“However, I was sworn in about an hour before the meeting,” he said.
“I’ll be making arguments in coming weeks and months…That’s starting now and that’s going to go a lot further.”
Of the low year-end rates he advocated, Miran said, “I don’t see very significant tariff inflation…I see disinflation coming from border policies…I don’t see a reason for being so far from neutral at the moment,” Miran said. “The longer you stay very restrictive the greater the risks of significant misses to the employment mandate.”
He said he and Trump spoke before the meeting on Tuesday but only for the president to wish him good luck.
“He called me Tuesday morning to congratulate me and that was it,” Miran said. “I did not talk to him about how I would vote. I did not talk to him about my ‘dots'” in the Fed’s table of rate and economic projections.
“I will do independent analysis based on my interpretation of the data, based on my interpretation of the economy, and that is all that I will do…He didn’t ask me to do any particular actions. I didn’t commit to doing any particular actions.”
MEETING WAS ‘UNREMARKABLE’
The Fed on Wednesday lowered its benchmark interest rate to the 4% to 4.25% range, the first change since Trump returned to office and a move supported by other Trump appointees to the central bank. The rate cut was coupled with an outlook for steadily easier policy this year, and a statement shaped by the majority that noted the rising risks to the labor market.
Federal Reserve Bank of Minneapolis President Neel Kashkari on Friday said job market risks warranted this week’s rate cut and likely reductions at the central bank’s next two meetings.
“I believe the risk of a sharp increase in unemployment warrants the committee taking some action to support the labor market,” Kashkari wrote in an essay published on Friday morning, adding that he also now feels there’s little risk of a sharp rise in inflation from tariffs.
Worries that tariffs could reignite inflation had kept the Fed from cutting interest rates until now.
Kashkari downplayed any worry that the Fed was losing trust with the public, despite inflation that is still above target and the ongoing political pressure from the Trump administration for lower rates.
In Friday morning comments to CNBC, Kashkari said that Miran’s arrival at the central bank’s policy meeting, even as he retains his role with the Trump administration, “was like any other transition where somebody comes in and everybody says ‘hey, welcome to the table. We look forward to hearing your contributions.’ And then everybody went about their business as normal.”
“What was remarkable about this meeting was how unremarkable it was,” he said.
PUBLIC STILL HAS FAITH IN FED INDEPENDENCE
Kashkari also said that recent developments in bond markets, with the 10-year yield declining of late to around 4.1%, showed that the public seemed to maintain faith in the Fed’s independence and ability to control inflation despite efforts by Trump to gain influence, including through a so far unsuccessful effort to fire Fed Governor Lisa Cook.
In markets and among members of Congress from both parties, “there’s widespread appreciation for how important Fed independence is,” Kashkari said. “I also think there’s a lot of confidence on both sides of the aisle that Fed independence…will be protected, and that the courts also see it that way…I think people are betting on the institutions of the country continuing to keep Fed independence, to keep it outside of the short-term political process.”
Cook’s firing has been blocked by two federal courts. The Trump administration’s request that it proceed is pending now before the Supreme Court.
Kashkari’s policy essay represents a shift from June when he felt only two quarter-point rate cuts would be needed this year. A drop in job creation since then helped change his mind.
Kashkari is not a voter this year on interest rate policy.
