To economic adviser to former President Donald Trump, Stephen Miran, it’s obvious that the Federal Reserve’s benchmark interest rate should be considerably lower. Yet he contends that the current level is unsustainable and therefore too high for a healthy economy. As the newly appointed, or even better, as a new member of the Federal Reserve’s Board of Governors, Miran calls for a major rate increase. He’d like to see the rate lowered to 2.5%, a significant reduction from today’s 4.1%. His positions mark a significant departure from the prevailing wisdom of his 18 colleagues on the Fed’s rate-setting monetary policy committee.
Miran creates a strong case for lower rates, citing a number of economic indicators. He points to the steep drop in immigration as a major culprit. By admitting a lower number of immigrants, we would help make available more housing stock, lower rents, and relieve inflationary pressures. He cites soaring tariff revenues and an aging population as additional arguments for lowering interest rates.
Throughout this era, Miran was unapologetically independent. He asserted repeatedly, “At the end of the day, I make my own analysis based on my own understanding of economics and how the economy works.” This was an important statement reminding us all of his intention to run the Federal Reserve free from outside pressure.
Miran, who was appointed by Trump, said that former president has not pressured him one bit. He is still at large to create his own monetary fudge. He mentioned that throughout the conversations they had, Trump never told him to develop policy in a particular way.
Miran’s proposed cut is close to a full percentage point reduction in interest rates. This enormous, controversial suggestion will almost certainly be a flashpoint for debate within the Fed. He admits that his perspective is different than many of his peers. It should be obvious then that my idea of proper monetary policy is quite different from theirs.”
President Trump is now attempting to oust Lisa Cook, another Fed governor. As she continues to fight her dismissal in court, this has created an unusual and newsworthy divergence in the case. The dynamics within the Federal Reserve continue to evolve as Miran seeks to implement his vision for monetary policy amid these challenges.
