Fed governor Stephen Miran was a senior White House adviser until his confirmation to the central bank board on September 15.

Miran replaced Adriana Kugler as a member of the Federal Reserve Board of Governors when she unexpectedly resigned in August.

Fed’s Miran Argues Steep Rate Cuts Are Needed

Please consider Fed’s Miran Argues Steep Rate Cuts Are Needed

In his first speech as a member of the central bank, Federal Reserve Governor Stephen Miran argued that significant interest-rate cuts are needed to avoid unnecessary damage to the labor market, backing demands from President Trump that the Fed pull rates sharply lower.

“I believe the appropriate fed funds rate is in the mid-2 percent area, almost 2 percentage points lower than current policy,” Miran said. On Friday, he claimed credit for a projection last week—as part of the Fed’s dot plot—that interest rates should fall another 1.25 percentage points before the end of the year.

Miran’s views are likely to meet resistance from many of his colleagues on the Fed’s policy committee who remain more concerned than he is about inflation. Earlier Monday, St. Louis Fed President Alberto Musalem said he believes interest rates are less than modestly restrictive after the Fed’s cut last week, signaling he will be cautious about supporting further cuts. 

Miran’s contrary view draws heavily on an academic approach to setting interest rates, popularized by John Taylor, a Stanford University professor. The “Taylor rule” approach calculates an appropriate interest rate using a formula that weighs economic variables. Miran said that on the surface, the Taylor rule suggests that the Fed’s current interest-rate stance is nearly on target. But he argued that recent policy changes—which also include regulatory and tax reforms—have reshaped the economy in ways that aren’t yet obvious to standard interest-rate models.

“Instead, I suspect existing backward-looking estimates are too high because they insufficiently account for recent changes to fiscal and border policies,” Miran said.

Meanwhile, at the Atlanta Fed

The Wall Street Journal reports Fed’s Bostic Sees Little Reason to Cut Rates Further for Now

Bostic said in an interview that he penciled in only one rate cut for all of 2025 at the Federal Reserve’s meeting last week. Because officials cut rates last week, that suggests Bostic doesn’t currently anticipate the need for another reduction at either of the two meetings remaining this year.

He said he had filled out those submissions “with a very light pencil,” underscoring low conviction over the right path for rates, but he said he remains more nervous about inflation continuing to run above the Fed’s 2% goal.

“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.” The Fed’s next meeting is Oct. 28-29.

Bostic doesn’t believe that “the labor market is in crisis right now,” he said. “It’s an open question about exactly how weak it is.”

Bostic said tariff-driven cost increases have been more muted than initially projected in part because businesses have used various strategies that are spreading out or delaying the pass-through to consumers. Those buffers could be exhausted over the coming months. In that case, the economy might avoid a much-feared immediate run-up in prices but instead endure a longer period of moderate price pressures.

“The full story has not been told in terms of how the change in their cost basis is going to reveal itself into the final goods process,” he said.

I side with Bostic on tariffs and inflation, but not jobs.

I side with Miran on nothing.

Strike that. I agree with Miran on this: ” Recent policy changes—which also include regulatory and tax reforms—have reshaped the economy in ways that aren’t yet obvious to standard interest-rate models.”

Yes, in favor of bigger deficits and higher inflation.

The argument for lower rates is that Trump will have crushed the economy so hard that demand collapses supporting lower rates.

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September 11, 2025: CPI Provides No Reason for Fed to Cut Interest Rates, It Will Anyway

The CPI was higher than expected in August, but the Fed will do what it wants to do.

September 17, 2025: Fed Cuts Interest Rates 1/4 Point, Trump’s New Fed Lapdog Dissents

Stephen Miran, Trump’s new appointee voted for a 1/2 point cut.

September 17, 2025: The Fed’s Interest Rate Projections and Trump’s Demands Are Light Years Apart

The Fed is quite undecided where interest rates should be. Trump isn’t.

Finally, please see Fed Notes “Challenging and Unusual” Setup on Unemployment and Inflation

Powell says risks to inflation are to the upside. Risks to labor market are to the downside.

Powell has this correct, but the Fed is hugely to blame for how we got here.

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