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Fed’s Miran Says US Economy’s Vulnerability Calls for Rapid Cuts

(Bloomberg) -- Federal Reserve Governor Stephen Miran said the US central bank risks damage to the economy by not moving rapidly to lower interest rates.

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Miran, a new Fed board member who was appointed by President Donald Trump, is an outlier among the central bank’s policymakers in calling for immediate, aggressive rate cuts. He argued the Fed’s current policy rate, which is in a range of 4% to 4.25%, is highly restrictive because it’s well above his estimate of the so-called “neutral” level — where policy neither boosts nor restrains the economy.

“That’s why it’s so important to start adjusting more quickly, rather than less quickly,” Miran said Thursday in an interview on Fox Business. “When monetary policy is in that restrictive a stance, the economy becomes more vulnerable to downside shocks. In my mind, there’s not really a need to be running that type of risk.”

The Fed voted to lower interest rates at its meeting last week by a quarter percentage point, the first cut of 2025. Miran dissented against the decision, instead favoring a half-point cut.

Several policymakers, including Fed Chair Jerome Powell, have approached rate cuts cautiously, amid concerns Trump’s tariff policies might persistently boost inflation. Powell has said that possibility, along with signs of a weakening labor market, poses a challenge for the Fed’s decision-making in the months ahead.

Miran on Thursday said officials can quickly implement a series of larger cuts to reach the neutral level, rather than moving slowly over the course of the year.

“My view is that we can get there in a very short series of 50-basis-point cuts, readjust monetary policy, and then move more gingerly once we’re there,” he said.