Trump's Fed appointee pushes for steeper rate cuts

"Stephen Miran, who is also a top economic adviser to Trump, said in remarks to the Economic Club of New York that sharp declines in immigration, rising tariff revenue, and an aging population all suggest that the Fed's rate should be closer to 2.5% instead. According to projections released last week, that's almost a full percentage point lower than any of his 18 colleagues on the Fed's rate-setting committee, an unusually high divergence."

"His appointment has been controversial because he has kept his position as the head of the White House's Council of Economic Advisers while taking unpaid leave, raising concerns about the Fed's traditional independence from day-to-day politics. His term on the Fed's board expires in January, and Miran has suggested he would return to the White House after that, though he could remain on the board until a successor is appointed."

"Miran said that fewer immigrants should free up more housing and lower rental costs, reducing inflationary pressures. And tariff revenues-which may top $300 billion a year, according to Congressional Budget Office estimates-should reduce the deficit, he added. Over time, that would mean the Fed doesn't have to keep its benchmark interest rate as high as it is now to bring inflation down."

The Federal Reserve's benchmark interest rate is 4.1%, and one governor projects it should be around 2.5%. Declines in immigration, higher tariff revenue, and an aging population are cited as factors that will ease inflationary pressure over time. That projection is nearly a full percentage point lower than any of the 18 colleagues on the Fed's rate-setting committee, creating a notable policy divergence. The governor views policy as very restrictive and risky for the Fed's goal of maximum employment. Projected tariff receipts above $300 billion could reduce the deficit and reduce pressure to keep rates elevated.

Read at Fast Company