On Monday, September 22, 2025, the Federal Reserve’s interest rate debate took a dramatic turn as Stephen Miran—President Donald Trump’s controversial appointee to the Board of Governors—publicly called for a much steeper cut than his colleagues, thrusting the central bank’s independence and future direction into the national spotlight. Miran, who also serves as a top economic adviser to Trump, argued in remarks to the Economic Club of New York that the Fed’s key interest rate should be slashed from its current 4.1% to around 2.5%. This stance, as reported by the Associated Press and echoed by other major outlets, represents a near full percentage point divergence from any of his 18 peers on the Fed’s rate-setting committee—an unusually stark split for an institution that prizes consensus.
Miran’s rationale is rooted in a trio of economic trends he believes are reshaping the landscape: sharp declines in immigration, rising tariff revenues, and an aging population. According to Congressional Budget Office estimates, tariff revenues could top $300 billion a year, which Miran says should help reduce the federal deficit. He contends that these factors collectively reduce inflationary pressure and, therefore, the need for high interest rates. “I view policy as very restrictive,” Miran said, emphasizing that current rates are holding back the economy and “pose material risks” to the Fed’s congressional mandate of maximum employment.
His appointment, however, has been fraught with controversy. Miran has remained the head of the White House’s Council of Economic Advisers while taking unpaid leave to serve on the Fed board—a move that has raised persistent concerns about the central bank’s traditional independence from the executive branch. There hasn’t been a member of the executive branch on the Fed’s board since the 1930s, and Miran’s dual role has only heightened scrutiny. His term on the board expires in January 2026, but he could linger until a successor is confirmed. Miran has stated he expects to return to the White House after his term concludes, explaining that he kept his Council position because the Fed stint is so brief.
Complicating matters further is President Trump’s ongoing campaign to reshape the central bank. Trump has repeatedly attacked Fed Chair Jerome Powell, urging the board to cut rates as low as 1.2%. In an unprecedented move, Trump is also seeking to fire Lisa Cook, a Fed governor. Cook has challenged her removal in court, and so far, judges have ruled she can keep her job while her lawsuit proceeds. The administration has now appealed the case to the Supreme Court, marking the first time a president has attempted to oust a sitting Fed governor. These maneuvers have only intensified the debate over the Fed’s independence and the proper boundaries between monetary policy and partisan politics.
During a question-and-answer session following his New York speech, Miran was quick to stress his autonomy. “At the end of the day, I make my own analysis based on my own understanding of economics and how the economy works,” he said, as quoted by the Associated Press. He added that in his conversations with President Trump, the president “never asked me to set policy in a specific way.” Still, Miran acknowledged, “it should be clear that my view of appropriate monetary policy diverges from those of other” committee members.
One of Miran’s more provocative arguments is that a decline in immigration should free up more housing and lower rental costs, thereby reducing inflationary pressures. “Fewer immigrants should free up more housing and lower rental costs, reducing inflationary pressures,” he stated. He also suggested that robust tariff revenues—potentially exceeding $300 billion annually—should help shrink the deficit, which, over time, would mean the Fed doesn’t need to keep interest rates as high to bring inflation down.
Yet this perspective is far from universally shared. Many economists, as noted by the Associated Press, argue that reduced immigration has actually left employers scrambling to fill jobs, forcing them to offer higher wages. While that’s great news for workers, it can also drive businesses to raise prices to cover increased labor costs, potentially fueling inflation rather than curbing it. The debate over immigration’s impact on inflation is complex, and Miran’s take has drawn both support and skepticism from across the economic spectrum.
Miran also floated the idea of reconsidering the Fed’s long-standing 2% inflation target, which has been a bedrock of its policy framework since 2012. “If you look before 2012, the Fed didn’t have a formal target at all,” Miran remarked. “They pursued low and stable prices. To me, that’s an interesting way of doing things also.” However, he was careful to add that any change in the target should only be considered after the Fed has “successfully achieved its target for a sustained period of time, to make sure that there’s no appearance whatsoever of moving goal posts.” According to the Fed’s preferred measure, prices excluding food and energy rose 2.9% in July from a year ago—still above the official target but moving in the right direction.
Other Fed officials, meanwhile, struck a much more cautious tone on Monday. Chair Jerome Powell, fresh off a quarter-point rate cut—the first of 2025—characterized the move as a “risk-management” strategy to guard against a weakening job market, rather than a signal of aggressive easing. The Fed’s rate-setting committee projects only two more cuts this year and one in 2026, far fewer than Miran is advocating. Alberto Musalem, president of the Federal Reserve Bank of St. Louis, warned, “There is limited room” to cut rates before they fall to a level that could actually stimulate the economy and reignite inflation. “We should tread cautiously,” Musalem advised, arguing that rates need to stay high enough to push inflation back to target.
This sharp divergence of views has laid bare the divisions within the Fed as it tries to chart a path through an unusual economic moment—one where hiring has nearly stalled, but inflation remains stubbornly above target. The stakes are high: when the Fed lowers its rate, it typically brings down borrowing costs for mortgages, car loans, and credit cards, which can spur spending and growth. But cut too deeply, and the risk is reigniting inflation before it’s fully tamed.
As Miran’s term on the board ticks down and the Trump administration’s legal battle over Lisa Cook’s position continues, the central bank finds itself at a crossroads—not just over the level of interest rates, but over its very independence and the boundaries of presidential influence. For now, Miran insists he’s his own man. Whether the institution he serves can remain above the fray is a question that may define the Fed for years to come.
