Fed’s Miran calls for slashing main interest rate to avert job loss

Core Insights - Federal Reserve Governor Stephen Miran voted against a quarter-point reduction in the benchmark interest rate, advocating instead for a half-point cut to address potential unemployment issues [3][7] - Miran argues that the majority of Fed officials overestimate inflation risks, particularly regarding tariffs, which he believes have led to excessive concern over price pressures [3][7] - He predicts that tariff revenues could significantly reduce the federal budget deficit, potentially by over $380 billion annually in the next decade, which may ease upward pressure on interest rates [4] Monetary Policy Debate - The recent monetary policy discussions have highlighted differing views among Fed officials, with St. Louis Fed President Alberto Musalem expressing limited room for further easing without risking an overly accommodative policy [5][6] - Musalem supported the recent 25-basis-point rate cut as a precautionary measure to support the labor market, emphasizing the importance of controlling inflation, which may remain above the 2% target due to tariffs and labor supply issues [5][6] - Miran contends that the neutral rate of interest has likely decreased due to tariff revenues and tax policies, suggesting that current monetary policy is too restrictive and risks higher unemployment [7]