Washington – The new member of the Federal Reserve Board of Governors has an unusual view of the U.S. economy that is still hard to “sell” to a broader audience.
In September, President Donald Trump appointed Steven Miran, one of his leading economic advisers, to temporarily fill the vacant seat on the Fed Board of Governors. Miran has participated in two central-bank meetings and each time rejected the majority position of the Board.
At the Fed’s October monetary-policy meeting, Miran expressed disagreement with the decision to cut rates by a quarter of a percentage point, supporting a larger cut – half a percentage point, as he did in September.
This new participant in monetary policy did not waste time making a first impression: in his first month on the job he spoke publicly at more than a dozen events and in media interviews. Of course, Fed officials typically hold only a few public appearances in the first month.
Just like Trump, Miran has repeatedly called for aggressive rate cuts. He argues that borrowing costs exert more pressure on the economy than is commonly believed, and that ahead in the market there could be significant disinflation – views he calls “outside the consensus.”
He repeated his views during a well-known Yahoo Finance interview on Wednesday.
Context of the appointment and first reactions to Miran’s policy
Not all analysts share Miran’s views on the economy and monetary policy.
“I would not call anything he says absurd,” said David Seif, Nomura’s chief economist for developed markets, in an interview with CNN after moderating a discussion with Miran in Washington. “This is more a discussion about the data he uses in his economic model.”
– David Seif
“Time will tell whether he turns out to be right,” he added.
Miran’s rationale for substantial rate cuts is largely based on his view of Trump’s broad economic policies and the expectation that tariff policy will not cause inflation.
Views on the neutral rate and reaction to Trump’s policy
In his first major speech after Miran’s appointment, he explained how Trump’s policy could influence a lower neutral rate – the theoretical level of borrowing costs that neither stimulates nor restrains the economy.
He highlighted the administration’s aggressive actions on immigration, the tax-and-spending bill enacted this year, and broad tariffs. In his assessment, this means the Fed has a lot of ground to cover to bring rates back to a more neutral level, and time matters in this matter.
“If policy remains so restrictive for a long period, there is a risk that the monetary policy itself will become a catalyst for a recession”
– Steven Miran
Moreover, Miran believes that ongoing mass deportations will reduce pressure on the housing market, which in turn will lead to lower rates and “significant disinflation.” He also does not always attach great importance to the potential effects of tariffs on consumer prices.
Although Miran holds a Ph.D. in economics from Harvard University and is generally regarded as a serious economist, his ideas have met resistance in certain circles.
“I do not see grounds for risking inflation higher if tightening is not needed”
– Steven Miran
Former U.S. Treasury Secretary Larry Summers criticized his debut speech as a member of the Fed Board, calling it “analytically weak” compared with expectations of a radical rate cut.
Moreover, some Wall Street analysts expressed doubts about his arguments – JPMorgan’s U.S. chief economist Michael Feroli noted that some of his reasoning seems questionable or incomplete, and almost none of it is persuasive.
Within the Fed itself, his views do not always find support. Like other Trump appointees – Christopher Waller and Michelle Bowman – they agree that a weaker labor market may be at risk of deterioration, but none of them supported a half-point rate cut, and none expressed the assumption that the neutral rate is below the generally accepted.
The behavior and views of Lisa Cook, who was entrusted with delivering a speech after Trump said he fired her, also drew attention. She stressed that the interaction between immigration and rising housing prices is a key aspect of her view of immigration policy and the labor market, but she does not see a need to oppose these two factors. She emphasized that the main role of immigration policy is to influence the labor market.
Currently, the market expectations landscape is divided: proponents of more aggressive monetary policy see Miran as a prospective reformer, while critics warn against risky experiments with rates that could push the economy toward a recession. Debates continue, and even among seasoned economists there is no single conclusion on whether Miran will be right in his key assumptions.
In sum, the new voice on the Fed Board brings an unconventional approach to monetary policy that aligns with certain administration views, yet faces strong opposition and mixed assessments from experts. Whether his arguments receive full recognition will depend on the data that arrive in the coming months, and on how strongly global and domestic factors will influence the market.