- Fed Governor Stephen Miran said “well over 100” basis points of rate cuts are justified this year because policy is overly restrictive and weighing on growth.
- He argues underlying inflation is already near the Fed’s 2% target after adjusting for distortions such as housing and portfolio-management fees.
- Most Fed officials are far more cautious, with the median projection implying only one cut and continued concern about inflation staying above target.
- The CBO similarly expects only gradual easing to about 3.4% by late 2026 as inflation remains elevated and growth slows.
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Stephen Miran is emerging as one of the most dovish voices on the Federal Reserve Board. He contends that monetary policy is “clearly restrictive” and that over 100 basis points of cuts are justifiable this year, standing in contrast to the more measured approach favored by most Fed officials. His stance is driven by his view that underlying inflation—which strips out distortions in housing and certain services—is already near 2 %, and that slower growth coupled with tight policy risks harming employment.
This assessment clashes with the Fed’s median policy projections, which currently signal just one rate cut for 2026. Many officials remain focused on inflation that remains above target and are cautious about cutting too aggressively. Their approach suggests waiting for more conclusive data on inflation and labor market dynamics before easing further.
Alternative perspectives support a more conservative path. The Congressional Budget Office (CBO) expects only modest rate reductions, to about 3.4 % by the end of 2026, and projects inflation will gradually decline but stay above target in the short term. Growth is expected to edge down over time. This articulation underscores risk of overshooting dovish policy too quickly, especially if inflation remains sticky or labor markets weaken unevenly.
Strategic implications include risks to the Fed’s credibility and inflation expectations if rate cuts are perceived as premature. Aggressive easing could boost growth but may re-introduce upside inflation pressure, especially from wages, energy, or supply-side shocks. Market expectations will likely respond to Miran’s rhetoric, but actual policy will be shaped by broader FOMC consensus and incoming data. Potential open questions include what constitutes Miran’s preferred terminal rate, how he interprets neutral policy, and the timing & sequencing of cuts in light of 2026 elections and political pressure.
Supporting Notes
- Governor Miran said in a Fox Business interview that “well over 100 basis points of cuts are going to be justified this year,” because he sees policy as overly restrictive and damaging to growth.
- He declined to support the Fed’s recent 25-basis-point rate cut in December, dissenting instead in favor of a 50-basis-point cut.
- Miran believes underlying inflation, after adjusting for distortions like housing inflation and fees from portfolio management services, is running very near the Fed’s 2 % target.
- Fed policymakers’ median outlook forecasts only one rate cut in 2026.
- The Congressional Budget Office predicts the federal funds rate will fall modestly to 3.4 % by Q4 2026, with inflation remaining above 2 % for several years and economic growth slowing from around 2.2 % to 1.8 %.
- Miran’s role: he will complete his current term as Fed Governor by January 31, 2026, and is on leave from his Council of Economic Advisers position.