Fed Governor Stephen Miran Call For Aggressive Rate Cut Amid Inflation

According to the recent updates on increasing internal differences between the U.S. Federal Reserve on how fast interest cuts should be.

As per Reuters, Most policymakers would want to take a gradual approach because of the inflation concerns still lingering, but Fed Governor Stephen Miran is demanding aggressive and faster cuts to safeguard economic growth.

What's Happening?

Fed Governor Stephen Miran has come out publicly demanding a significant reduction of interest rates of up to 50 basis points claiming that the current monetary policy position is too tight on the U.S. economy.

His stance sharply contrasts with other Federal Reserve officials, who believe inflation remains a significant threat.

Last month, Miran dissented in favour of a half-point cut, while the Federal Open Market Committee (FOMC) approved only a smaller 25 basis point reduction.

Although economic data such as the latest employment report was delayed due to a US government shutdown , Miran insists the Fed still has enough time to act before its next policy meeting in late October.

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Why Does Miran Want Faster Rate Cuts?

Stephen Miran believes that if monetary policy is misaligned with the actual state of the economy, it should be corrected quickly rather than gradually.

Recent shifts in economic fundamentals—particularly on the immigration front—suggest that the so-called “neutral” interest rate has declined. It implies that the existing levels of borrowing, which may seem moderate, are actually stricter than intended.

Miran is worried that holding interest rates too high and too long might result in a loss of economic momentum. He states that good financial market results are not always indicative of a supportive monetary policy, citing tight housing finance conditions as an indicator of stress.

He believes that aggressive fed rate cuts easing can be postponed to exacerbate the slowdown until it is reflected in the data. Consequently, he still advocates an accelerated rate reduction to bring policy in line with reality on the ground.

Why Are Other Fed Officials Cautious?

Many Federal Reserve officials believe that moving too quickly would be risky. Officials such as Chicago Fed President Austan Goolsbee and Dallas Fed President Lorie Logan have pointed out that services-based inflation is still running above the 2% target, signalling persistent price pressures.

They claim that pushing rates too low would reverse the gains made in the recent past to reduce inflation. Fed Chair Jerome Powell also confirmed that there was no widespread consensus of a 50 basis point reduction in the last meeting.

These policymakers advocate a more moderate stance, which is that some restraint should be maintained until inflation is persuasively behind us. They are more concerned with the possibility of a situation in which they are forced to make rapid rate cuts that will lead to another inflation spike.

What's the Plan Ahead?

In spite of the internal disputes, the wider federals' view is that there will be more rate cuts in the next few months. Authorities estimate interest rates to stabilize at 3.5-3.75 by year-end, and additional slow declines through 2026.

The most important debate, however, is the pace at which these cuts should be made. Miran works best with immediate, forceful action, whereas others are more inclined to a slower, data-driven approach. The next policy meetings will decide whether the majority will swing towards caution or urgency.

Conclusion

The Federal Reserve has ended up juggling two opposing interests: growth and inflation control. The pressure to make quick rate cuts, as advocated by Stephen Miran, points to an increasing pressure inside the Fed, although currently, he is a solitary but undeterred voice.