Trump-Appointed Fed Governor Miran Calls for Interest Rate Cut to 2.5%

Federal Reserve Governor Stephen Miran said Monday that the central bank’s key interest rate should be reduced from 4.1% to approximately 2.5%. His recommendation is nearly a full percentage point below the lowest forecast from any of the other 18 members of the Federal Open Market Committee (FOMC).

Speaking at the Economic Club of New York, Miran said the current rate is “very restrictive” and is slowing job growth.

“It should be clear that my view of appropriate monetary policy diverges from those of other members,” Miran said.

Factors for Lower Rates

Miran cited three reasons for lowering rates:

• Immigration: A decline in immigration eases demand for housing and reduces rental costs.

• Tariff Revenues: Tariffs could generate more than $300 billion annually, helping reduce the federal deficit.

• Population Aging: An older population slows long-term economic growth.

He said these factors allow the Fed to lower rates while still controlling inflation.

Miran’s Roles in Government

Miran continues to serve as a senior economic adviser to President Donald Trump while on unpaid leave from the White House Council of Economic Advisers. His dual roles have drawn attention because Fed governors are traditionally independent from the executive branch.

His term on the Board of Governors ends in January 2025, but he can remain until a successor is confirmed. Miran has said he intends to return to the White House after his term concludes.

Fed Rate Projections

The Fed’s latest “dot plot” shows most committee members expect a slower pace of rate cuts, keeping rates above 3% through 2026. Miran’s recommendation of 2.5% is below the market consensus.

Futures contracts suggest investors expect the rate to reach around 3.25% by the end of 2025. Miran’s proposal represents a significant departure from these expectations.

Economic Impact of Miran’s Proposal

Miran’s recommendation for a 2.5% rate comes as the U.S. economy shows mixed trends. Year-over-year rent growth in major cities slowed slightly, with the Case-Shiller U.S. National Home Price Index rising 3.4% in July, down from 4.1% in June. Slower immigration may reduce housing demand in urban areas, which could ease rent increases over the next 12–18 months.

Tariff revenue collected by the U.S. government is projected to exceed $300 billion this fiscal year, according to Congressional Budget Office estimates. Miran cited this revenue as a factor that could reduce federal borrowing needs. While higher revenues may ease fiscal pressure, the Federal Reserve still sets interest rates to manage inflation and employment rather than government revenue.

The unemployment rate was 3.8% in August. Miran said the current Fed rate slows hiring and wage growth, and lowering rates could increase labor participation and economic activity.

Fed Governors’ Positions

Fed governors sometimes disagree on policy. In the latest FOMC projections, Miran recommends a 2.5% benchmark rate, while other members’ forecasts are near 3.5%–4.0%.

Miran continues to serve as a senior economic adviser to President Donald Trump while on unpaid leave from the White House Council of Economic Advisers. His dual role has drawn attention because most governors do not hold active positions in the executive branch while serving on the Fed board.

Also Read: Fed Rate Cut 2025: Impact on Mortgages, Credit Cards, HELOCs and Savings