Miran: monetary policy could offset impact of credit-card caps

Miran: monetary policy could offset impact of credit-card caps

Monetary Policy Could Offset Impact of Credit-Card Caps, Fed Official Suggests

The debate over a proposed 10% federal cap on credit card interest rates has intensified, with critics warning of reduced credit access and unintended economic consequences. Federal Reserve Governor Stephen Miran has highlighted how monetary policy could play a role in mitigating such impacts, though his remarks focus broadly on the interplay between regulation, productivity, and central bank tools.

Opponents of the rate cap, including major banking groups, argue that capping interest rates at 10% would shrink credit availability for tens of millions of consumers, including those with strong credit histories. A 2026 analysis by the American Bankers Association (ABA) found that 74%–85% of open credit card accounts could face closures or reduced credit limits under such a policy, disproportionately affecting middle- and lower-income households. Critics warn this would force borrowers toward riskier alternatives like payday lenders, undermining affordability goals.

Miran's recent speech on deregulation and monetary policy offers a framework for understanding how central banks might respond to such market disruptions. He emphasized that regulatory changes—whether tightening or loosening—directly influence the economy's productive capacity and inflation dynamics. For instance, deregulation can boost productivity by expanding supply-side capacity, allowing for more accommodative monetary policy without fueling inflation. Conversely, restrictive policies like rate caps could reduce credit availability, potentially slowing consumer spending and economic growth.

While Miran did not explicitly address credit card caps, his analysis implies that the Federal Reserve could adjust policy to offset supply-side shocks. For example, if a rate cap led to reduced consumer credit usage—a key driver of 12% of U.S. GDP in 2024—the Fed might ease monetary policy to stimulate demand and stabilize inflation. However, Miran cautioned that such interventions require precise calibration, as misjudging regulatory impacts could lead to unnecessary economic contractions, as seen in historical examples like 1970s gasoline price controls.

The Federal Reserve's ability to respond hinges on accurately measuring how regulations affect credit markets and broader economic activity. As Miran noted, deregulation's benefits often materialize over years, complicating short-term policy decisions. With congressional support for the rate cap remaining uncertain, the Fed's role in balancing affordability goals with systemic stability will remain critical.

(https://www.foxnews.com/opinion/why-capping-credit-card-interest-rates-kill-credit-working-families): Fox News analysis of historical price controls.
(https://www.aba.com/about-us/press-room/press-releases/rate-cap-research): ABA survey of credit card issuers (Dec. 2025–Jan. 2026).
(https://www.federalreserve.gov/newsevents/speech/miran20260114a.htm): Federal Reserve Governor Stephen Miran's speech (Jan. 2026).
(https://bpi.com/bpinsights-january-17-2026/): BPI and ABA statements on credit card policy impacts (Jan. 2026).
(https://bpi.com/banks-respond-to-proposed-cap-on-credit-card-interest-rates/): Joint statement from banking associations (Jan. 2026).