Why Trump’s Newest Fed Appointee Wants Steep Rate Cuts

• The Federal Reserve has been reluctant to cut rates too much because it is concerned that Trump’s tariffs are pushing up consumer prices and risk stoking inflation.
  

• Inflation is still above the Federal Reserve’s target of a 2% annual rate and has risen in recent months as Trump’s sweeping campaign of import taxes has gone into effect.
  

• Stephen Miran, the newest member of the Fed’s policy-setting committee, said that Trump’s mass deportations would soon push down inflation and that tariffs were not pushing prices up. This view starkly differs from that of other economists and Miran’s fellow members of the FOMC.
  

According the newest member of the Fed’s policy committee, President Donald Trump’s economic policies are pushing down inflation, clearing the way for the Federal Reserve to swiftly and steeply cut its key interest rate.

That was the message from Stephen Miran in his first public appearance since joining the Federal Open Market Committee on Tuesday. Miran was confirmed as a Fed governor just in time to cast the loan dissenting vote in the Fed’s decision to cut its influential interest rate by a quarter point.

In a televised interview on CNBC’s Money Matters Friday, he explained why he voted for a larger cut.

“I don’t see very significant tariff inflation,” Miran said. “I see very little evidence of any of it to date. I see disinflation coming from the border policies. And I see some downward pressures coming from other coming up from other other forces too, like deregulation.”

Miran seems to be an outlier on the Fed’s policy committee and among economists, many of whom have seen signs that tariffs are pushing up prices on store shelves.

Foreign countries are paying the cost of tariffs, he said, contradicting numerous analyses by other experts that found U.S. companies and consumers are footing the bill for Trump’s sweeping import taxes. This week, for instance, the Peterson Institute for Economic Analysis found that U.S. businesses were paying most of the tariffs, and that they would increasingly pass costs along to consumers as they exhausted inventories purchased before the tariffs took hold.

Miran confirmed he not only voted for a sharper rate cut than his colleagues, but wanted far steeper ones in the future. A set of economic projections released by the Fed on Wednesday showed one person among 19 Fed policymakers favored cutting the fed funds rate to a range of 2.75% to 3% by the end of the year, three-quarters of a percentage point lower than the next lowest projection.

While the predictions are anonymized in the report, Miran said he was the outlier in the rate projections. Miran said he would fully explain his views in a paper to be published Monday.

His advocacy of steep rate cuts—along the lines of what Trump himself has demanded—raised questions about the central bank’s independence. Miran said he will take a leave of absence as a member of Trump’s Council of Economic Advisors while working in his role on the Fed, but his continued employment at the White House raised concerns for some that he will be influenced by politics rather than economics.

Miran is the first Fed governor since the central bank was reformed in the 1930s who also has a job in the White House. Miran downplayed the significance of his dual role on Friday and emphasized that his stint on the Fed’s board is set to expire in January. He said he would resign from the Council of Economic Advisors if he were nominated to a 14-year term after his current term expires.

Still, Miran adopted a view of the economy and interest rate policy aligned with Trump, starkly contrasting many economists and analysts, including Fed Chair Jerome Powell and other committee members.

Some economists have voiced concerns that Trump’s installation of Miran and his attempt to fire Fed Governor Lisa Cook represent a takeover of the Fed. But so far, Miran is just one vote out of 12 on the committee and one voice among the 19 leaders who set the bank’s monetary policy.

“The only way for any voter to really move things around is to be incredibly persuasive, and the only way to do that in the context in which we work is to make really strong arguments based on the data and your one’s understanding of the economy,” Fed Chair Jerome Powell said at a press conference in Washington Wednesday following the Fed’s interest rate meeting. “That’s really all that matters, and that’s how it’s going to work.”

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