The newest member of the Federal Reserve Board of Governors threw substantial shade on colleagues who are watching for evidence of tariff inflation before committing to further interest-rate cuts.

Stephen Miran said the U.S. economy is more vulnerable to shocks given high interest rates and the “unfounded inflation concerns among Federal Reserve policymakers.”

In other comments to Fox Business on Sept. 25, Miran added that “there is no material evidence of tariff-driven inflation, but that seems to be holding up others on the Fed.”

Miran also told Bloomberg Surveillance on Sept. 25 that the U.S. central bank risks damage to the economy by not moving rapidly to lower interest rates. 

He argued the Fed’s current policy rate, which is in a range of 4% to 4.25%, is highly restrictive although it’s well above his estimate of the so-called “neutral” level where policy neither boosts nor restrains the economy.

FOMC Summary of Economic Projections Chart

Federal Reserve Bank of St. Louis

Miran’s a Fed outlier and proud of it

Miran was the only member of the Federal Open Market Committee to break with the panel’s decision to lower rates by a quarter percentage point Sept. 17.

More Federal Reserve:

  • Federal Reserve official pushes big interest-rate cuts

Miran dissented in favor of a jumbo cut of a larger half-point cut and also forecast a much more aggressive approach to future rate cuts.

In an unprecedented arrangement, Miran is on unpaid leave as chair of the White House Council of Economic Advisers while serving a temporary term at the Fed that ends Jan. 31.

Miran would be able to stay at the Fed indefinitely, however, if Trump doesn’t nominate a successor.

Morin’s appointment this summer by President Donald Trump rattled Fed watchers, economists, and traders here and abroad who spoke of the need for the U.S. central bank to remain independent of political control.

Trump has made clear he intends to appoint Fed governors who back his version of monetary policy.

Federal Reserve’s monetary policy balances inflation, jobs

The Federal Reserve’s dual mandate from Congress requires price stability and full employment.

  • Lower interest rates lead to less unemployment but higher prices.
  • Higher interest rates lead to lower inflation but higher unemployment.

Related: Former Fed heads, Treasury Secretaries send Supreme Court strong message

The Fed held off cutting the Federal Funds Rate this year to monitor the impact of tariff inflation on the nation’s supply chain and determine whether those price increases would be a one-time bump or linger in consumers’ wallets.

In voting for the rate cut, the Federal Open Market Committee cited data showing increasing weakness in the labor market.

Miran calls for aggressive interest-rate cuts

Fed Chair Jerome Powell has said the Fed needs to monitor risks on both sides of its mandate before committing to additional interest-rate cuts.

Kansas City Fed President Jeff Schmid, in remarks prepared for an event Sept. 25, said he supported the recent rate cut but hinted he may not back another reduction any time soon.

Miran disagrees.

“I don’t think the economy is about to crater. I don’t think the labor market is about to fall off a cliff,” he told Bloomberg Surveillance.

But given the risks, “I would rather act proactively and lower rates as a result ahead of time, rather than wait for some giant catastrophe to occur,” he said.

“The neutral rate is drifting down, and as a result of that, it’s incumbent upon policy to adjust in response,” Miran said. “If policy stays excessively restrictive for too long, then you do get to a situation in which you have a meaningful increase in the unemployment rate.”

Balancing inflation, labor risks in the months ahead

Brian Mulberry, senior portfolio manager at Zacks Investment Management, said Powell spoke about the balance of risks at the press conference following the Sept. 17 rate cut vote.

“Payrolls growing only at an average of 29,000 over the last three months is anemic at best and at risk of falling negative in the near term which would be a strong negative for markets,” Mulberry said.

“That said, the dot plot does give markets a lifeline in confirming two more cuts by year’s end and an additional cut next year versus prior expectations,” Mulberry added.

  • Miran spoke just before new government data showed second-quarter growth in gross domestic product accelerated to the fastest pace in nearly two years, underscoring the U.S. economy’s resilience.
  • Separate data published simultaneously showed weekly initial filings for unemployment insurance fell to the lowest level since July.

Related: Fed chair cites dual risks over jobs, inflation as politics loom