Federal Reserve Governor Stephen Miran said US interest rates remain too high and urged the central bank to lower them more aggressively in the coming months to safeguard employment.
In his first policy speech since being appointed by President Donald Trump, Miran argued that the neutral rate of interest — the level where policy neither stimulates nor restrains the economy — has fallen due to structural shifts in immigration, tariffs, and tax policy.
“The upshot is that monetary policy is well into restrictive territory,” Miran said Monday in prepared remarks at the Economic Club of New York.
“Leaving short-term interest rates roughly 2 percentage points too tight risks unnecessary layoffs and higher unemployment.”
Push for deeper easing
Miran participated in last week’s Federal Open Market Committee (FOMC) meeting, where policymakers reduced rates by a quarter percentage point to a range of 4–4.25%.
He dissented, favouring a larger half-point cut.
Miran said Friday that he wants to see rates lowered by another 1.25 percentage points at the Fed’s two remaining meetings this year.
By comparison, the median projection of the Fed’s 19 officials points to just another half-point of easing.
Miran, who previously served as chair of the White House Council of Economic Advisers, is on unpaid leave from that role while serving at the Fed.
His term as governor runs until the end of January.
Neutral rate debate
Miran estimates the neutral rate at about 2.5%, below the Fed’s median projection of 3%.
He argued that tariffs, reduced immigration, and this year’s tax legislation are pressing the rate lower, while deregulation could provide some offset.
“In my view, insufficiently accounting for the strong downward pressure on the neutral rate resulting from changes in border and fiscal policies is leading some to believe policy is less restrictive than it actually is,” Miran said.
While Miran downplayed inflation concerns, including tariff-related pressures, other Fed officials voiced more caution.
Diverging views among Fed officials
St. Louis Fed President Alberto Musalem said Monday he backed last week’s rate cut but sees only limited scope for further easing.
“Should further signs of labor market weakness emerge, I would support additional reductions in the policy rate, provided the risk of above-target inflation persistence has not increased,” Musalem said.
Atlanta Fed President Raphael Bostic told the Wall Street Journal he is reluctant to support another rate cut when policymakers meet in late October.
“I am concerned about the inflation that has been too high for a long time,” Bostic said.
“And so I today would not be moving or in favor of it, but we’ll see what happens.”
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