Federal Reserve Governor Steven Miran calls for faster and deeper interest rate cuts, warning that current monetary policy may hurt the labor market. He discusses inflation trends, AI-driven productivity, balance sheet changes, tariffs, deregulation, and the 2026 economic outlook in a detailed interview.
Federal Reserve Governor Steven Miran Pushes for Aggressive Rate Cuts
Federal Reserve Governor Steven Miran offered an expansive and candid assessment of the U.S. economic landscape during an in-depth interview, signalling his continued push for deeper and faster rate cuts while urging policymakers to calibrate monetary policy for long-term conditions rather than short-term price distortions.
Speaking ahead of the December policy meeting, Miran said he continues to advocate for a rate cut larger than the expected quarter-point move. He reiterated that the U.S. economy remains under excessive monetary tightening, which is slowly pushing the unemployment rate upward. Calling the inflation threat a “mirage,” Miran argued that most of the price pressures recorded in recent years stem from supply-demand imbalances that originated between 2022 and 2024 and are still working their way through statistical measurements.
He noted that current monetary policy decisions must target conditions in 2027, not 2025, because interest-rate effects take up to 18 months to fully enter the economy. Miran said failing to adjust rates more quickly risks suffocating positive growth developments stemming from deregulation, full expensing under tax policy, and renewed trade stability.
Miran also warned that labor market risks are becoming more serious, pointing to a gradual drift in unemployment. He said the Federal Reserve risks being responsible for unnecessary job losses if it fails to respond in a timely manner. While several Fed officials remain cautious about inflation, Miran stated that disinflation is supported by new technologies such as artificial intelligence, which boost productivity and reduce long-term price pressures.
A key factor in his rate-cut argument is the supply-side expansion of the economy. According to Miran, deregulation, rising capital formation, and renewed investment flows are all disinflationary forces. He emphasized that when supply increases, the natural policy response should be lower interest rates.
The Federal Reserve Governor also highlighted important structural issues beyond the central bank’s immediate control, particularly in the housing market. While lower mortgage rates would eventually help, he noted that actual housing supply remains constrained by state and local regulatory barriers. He also pointed to the direct effect of immigration on home prices, explaining that a sudden increase in population, when housing supply is fixed, inevitably pushes rents and home prices higher.
Another major shift is expected on December 1, when the Fed will halt the runoff of mortgage-backed securities (MBS). Instead, the central bank will replace maturing MBS with Treasury bills to maintain a stable balance sheet without injecting additional mortgage risk into the market. Miran stressed that the Fed’s long-term goal should be a smaller balance sheet dominated by low-risk Treasury assets rather than mortgage exposure.
He reiterated that large-scale quantitative easing (QE) in the past distorted financial markets and constrained the Fed’s policy flexibility for years. The upcoming pivot to a flat balance sheet marks a significant shift in strategy.
Addressing broader economic debates, Miran said he believes tariffs have contributed to increased national savings, calming financial markets and reducing long-term neutral interest rates. While he declined to comment directly on the legality of tariff authority, citing Fed independence, he said financial markets have clearly become more stable as tariff revenue supports fiscal sustainability.
On bank regulation, Miran argued that banks have been forced to hold excessive capital for over a decade, pushing lending activity into private credit markets. He voiced support for Vice Chair Michelle Bowman’s calls to reduce capital burdens so banks can expand lending and contribute more effectively to economic growth.
Discussing the transition to a new Federal Reserve leadership in 2026, Miran noted that the direction of the Fed next year will depend heavily on how far the current committee progresses in lowering rates before the new chair takes over. While he declined to speculate on President Trump’s potential nominee for Fed Chair, he emphasized that the institution’s sentiment could shift meaningfully depending on the pace of cuts implemented in early 2026.
Miran ended by reaffirming his core message: monetary policy is too tight for the current economic environment, the risks to employment are rising, and inflation fears are overstated. He warned that if the Fed fails to respond quickly, the central bank itself could become the primary driver of elevated unemployment in 2026.
Disclaimer:
This article is based on publicly available interview transcripts and economic commentary. The analysis presented here is for informational and news reporting purposes only and should not be considered financial advice. Readers are encouraged to verify information independently before making financial or investment decisions.