Stephen Miran, the newest Federal Reserve governor and a Trump-linked economist, wasted no time making waves during his first week on the job.
He was the lone policymaker to push for a jumbo half-point interest rate cut, a move that rattled Fed watchers and drew more warnings about the central bank’s independence.
A dovish Federal Reserve pivoted from an eight-month “wait-and-see” approach to monetary policy Sept. 17 by issuing a quarter-percentage point rate cut that was widely expected by many, but equally laced with non-economic drama.
At issue:
- The Trump Administration’s unprecedented attempt to control monetary policy is causing grave concerns at home and abroad about the future independence of the U.S. central bank.
- Miran participated in his first Federal Open Market Committee meeting just hours after the GOP-led Senate rushed his nomination to a confirmation vote.
- Miran remains on leave from the Council of Economic Advisors, a strong link to the White House that raised eyebrows about President Donald Trump’s hands-on ties to the Fed.
Federal Reserve Bank of New York/ TheStreet
Trump-linked Fed governor rejects criticism
Miran said he didn’t discuss his vote for a half-point percentage, or jumbo, cut with Trump prior to the Sept. 19 vote.
More Federal Reserve:
- Can the president fire a Federal Reserve governor?
The president and his allies have sharply criticized the Fed and its Chair Jerome Powell for failure to cut interest rates earlier this year.
Trump has been demanding a full three-percentage-point drop in the benchmark Federal Funds Rate.
Trump at one point discussed firing Powell, which was likely illegal. Instead, the White House turned to frequent name calling, threats and taunting to sway lower interest rates which Trump maintained was necessary to lower the cost of borrowing money and keep the economy out of recession.
Miran describes phone call with Trump
Miran said he spoke with the president the first morning of the two-day FOMC meeting.
“He called me Tuesday morning to congratulate me, and that was it,” Miran told CNBC Sept. 21.“I did not talk to him about how I vote. I did not talk to him about my dots in the [Summary] of Economic Projections.”
The Fed also released its quarterly Summary of Economic Projections (SEP) which shows what Fed officials expect to happen with key economic indicators including interest rates, inflation, employment and growth in the future.
Nine Fed officials forecast two additional interest-rate cuts this year with seven members forecasting one or none in 2025.
Moran’s “dot” for where he sees the Federal Funds Rate at the end of this year was well below the rest of the forecasts of his new colleagues.
The widely watched CME Group FedWatch Tool estimates a 91.9% chance of a quarter-percentage-point rate cut at the next FOMC meeting in October.
Federal Reserve’s monetary policy balances inflation, jobs
The Federal Reserve’s dual mandate from Congress requires price stability and low unemployment.
- Lower interest rates lead to less unemployment but higher prices.
- Higher interest rates lead to lower inflation but higher unemployment.
The Fed had held off cutting the Federal Funds Rate this year to monitor the impact tariff inflation through the nation’s supply chain and to determine if those price increases would be a one-time bump or linger into consumers’ wallets.
Related: Jobs crisis drives Fed to historic interest-rate vote as inflation rises
“Finally, the Fed has resumed its course of lowering rates, yet uncertainty and confusion surrounded the announcement,” said Ben Shapiro, CEO of WEBs Investments. “Now the focus is on who controls the direction of the Fed and what factors.”
“Individuals are feeling the pain, and certain housing and inflation sensitive sectors will not feel the relief they were hoping for with the lackluster communication around the rate drop,” Shapiro added.
Miran deflects critics on Fed independence: “A bit silly.”
Miran’s temporary placement on the board ends Jan. 31 but he is allowed to stay indefinitely until a permanent placement is named or if Trump appoints him to hold the seat permanently.
Miran drew outrage during his Senate confirmation hearing when he announced he would only take a leave from the Council of Economic Advisors, and not resign.
Democrats, other economists and market watchers said the action would tighten the president’s control of the board. In past administrations, political influence over the Federal Reserve would be found to be more discrete.
Senate Democrats introduced a bill Sept. 16 aimed at drawing a firmer line between the White House and the Fed.
Miran had three words for those concerns: “A bit silly.” He only intends to stay at the Fed until the unexpired term he is filling ends Jan. 31, 2026.
“If the President told me that I was going to stay in the seat past January, I would just resign immediately. You know, there’d be no question about it,” he said.
Related: J.P. Morgan sends strong recession message on Fed interest-rate cut
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