Sworn in only Tuesday, Trump ally Stephen Miran has wasted no time making his presence known on the Board of Governors of the Federal Reserve System.
During the Wednesday FOMC statement, it was revealed that Miran was the lone dissenter. Miran wanted a 50-bps cut, versus the 25-bps cut that was announced.
In addition, while the Fed doesn’t reveal which member is behind the economic projections, there was a notable outlier on the dots related to where the Fed funds rate should be by the end of this year. That outlier was most likely Miran.
The outlier is calling for a 2.75-3% (2.9% at midpoint) fed funds rate by the end of 2025. This compares to the median fed funds rate projection of 3.5-3.75% (3.6% at midpoint) by the end of the year. The current Fed funds rate is 4-4.25%. So, while the majority of the Fed members are looking for two more 25-bps cuts by year’s end, Miran appears to be asking for the Fed to cut rates by another 1.25% by the end of the year - five more 25-bps cuts.
In the FOMC’s decision to cut the rate by 25-bps, the Fed pointed to slowing jobs growth and the tick up in the unemployment rate. Jobs is one-half of the Fed’s dual mandate. The other half is inflation, which is still sticky. Fed Chair Powell described the cut as a “risk management decision.”
While Miran’s dissent was glaring, some expected up to three dissenters. Economists at Deutsche Bank, for example, had flagged potential hawkish dissents from Chicago’s Austin Goolsbee or Kansas City’s Jeffrey Schmid and possible dovish dissents from governors Michelle Bowman or Christopher Waller.
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