Monetary Matters with Jack Farley Fed Governor Miran: The Case For Big Rate Cuts | Miran on Deterioration in Labor Market, the Neutral Rate of Interest, and Fed Balance Sheet Policy
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Nov 6, 2025 Stephen Miran, a member of the Federal Reserve Board, advocates for more aggressive rate cuts, arguing that the current policy is too restrictive. He highlights the weakening labor market and changing demographic trends that are pushing down the neutral interest rate. Miran also discusses how imputed prices may inflate CPI readings and the impact of tariffs on national saving. He emphasizes the limited upside risk of inflation and the need for the Fed to reach neutrality quickly, all while maintaining the importance of central bank independence.
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Population Growth Drives R‑Star Shifts
- Population growth materially raises neutral rate by increasing investment demand, so falling population growth pulls neutral down.
- Recent abrupt immigration shifts produced unusually fast changes in r-star.
Trade Policy Can Lower R‑Star
- Tariffs can increase national saving via tariff revenues and thus lower r-star more than offsetting some investment effects.
- Miran quantifies tariff-induced fiscal improvements as a significant downward force on neutral.
Prepare For A Likely December Cut
- Miran expects a December cut unless new data arrive and encourages readiness for changing information.
- He stresses voting outcomes matter and that the committee will act based on the distribution of votes.