Key Takeaways
- Stephen Miran argues inflation is imprecise to measure, and clinging to a strict 2% goal risks “excessive micromanagement.”
- Miran was the only Fed board member to vote for a half-point cut instead of a quarter-point cut.
- His stance contrasts with Fed Chair Jerome Powell, who warns that Trump’s tariffs could still drive inflation higher.
Donald Trump’s new member of the Federal Reserve’s interest-rate-setting board, Stephen Miran, has called the Fed’s 2% inflation goal “too restrictive.”
The comments come as the Fed cut interest rates by a quarter point last week, lowering them to between 4% and 4.25%, the lowest level since 2023.
Miran, out of 12 voting board members, was the only individual to vote for a half-point cut instead of a quarter-point cut, The Guardian reported.
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Miran Believes 2% Goal Too Strict
Speaking to the Economic Club of New York, Miran argued that the Fed should aim for looser conditions, suggesting that rates should fall below 3% before the end of the year.
He downplayed the inflationary impact of Trump’s new tariffs, saying concerns were exaggerated and that shifts in trade and savings patterns would balance out over time.
“Relatively small changes in some goods prices have led to what I view as unreasonable levels of concern,” Miran said.
Miran argued that inflation is difficult to measure precisely, and therefore clinging to such a specific target risks pushing the Fed into “excessive micromanagement.”
He suggested the economy could perform well with a higher or more flexible inflation range, rather than holding so firmly to the 2% benchmark that has guided Fed policy for decades.
Miran’s Disagreement With Fed Chair
This stance sharply contrasts with Fed Chair Jerome Powell, who has warned that tariffs could still exert upward pressure on prices.
“Higher tariffs have begun to push up prices in some categories of goods, but their overall effects on economic activity and inflation remain to be seen,” Powell said.
Powell has maintained that while their effects may be temporary, the risk of persistent inflation cannot be ignored.
“That is a risk to be assessed and managed,” Powell said.
Miran and Trump
Miran, who is on temporary leave from his role as chair of President Trump’s Council of Economic Advisers while serving at the Fed, said his positions reflect his own analysis rather than instructions from the administration.
However, his willingness to question the inflation target and push for steeper rate cuts signals a more aggressive stance on supporting growth, and reflects his alignment with Trump’s economic priorities.
Miran maintains that Trump has “never asked me to set policy in a specific way.”
“I will always be polite and collegial, but I don’t view building consensus for the sake of establishing consensus,” Miran added.
“I’m not going to vote for something I don’t believe in just for the sake of creating an illusion of consensus where there is none.”
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