Fed's Internal Battle Over Rate Cuts Intensifies as Miran Pushes for Aggressive Easing

Fed Governor Miran Advocates for Further Rate Cuts Amid Dissent and Global Easing Trends

Federal Reserve Governor Stephen Miran has emerged as a vocal advocate for additional rate cuts, signaling a more aggressive stance on monetary easing than the Federal Open Market Committee (FOMC) has pursued in recent months. Miran, a newcomer to the Fed's board of governors, dissented at the October FOMC meeting, opposing the decision to cut rates by 25 basis points and instead favoring a 50-basis-point reduction. He also joined Kansas City Fed President Jeffrey Schmid in dissent, though Schmid preferred to keep rates unchanged entirely, as reported in Barron's live coverage.

Miran's arguments center on the risks of maintaining what he describes as an overly restrictive policy. In a recent Investing.com interview, he stated that "monetary policy remains too restrictive" and warned that prolonged tightness could inadvertently trigger a downturn. Miran's position contrasts with Fed Chair Jerome Powell's recent remarks, which suggested that a December rate cut is "not a forgone conclusion," a point also noted in the same Investing.com piece. The Fed cut its benchmark rate by 25 basis points in both September and October, bringing the target range to 3.75%-4%, but Miran has consistently called for larger reductions to align with his more sanguine inflation outlook.

The Fed's cautious approach reflects broader economic uncertainties, including a slowing labor market and mixed inflation data. However, Miran's dissent highlights growing internal debate over the appropriate pace of easing. Notably, back-to-back dissents from the same governor are rare, as most Fed officials typically align with the committee after a single dissent, as Barron's noted. Miran's continued advocacy underscores his belief that the Fed must act swiftly to avoid economic stagnation.

Globally, other central banks are also considering rate cuts, adding context to the Fed's deliberations. In Indonesia, Bank Indonesia Governor Perry Warjiyo acknowledged room for further cuts, though timing depends on rupiah stability and the effectiveness of prior reductions, according to a Business Times report. Meanwhile, India's bond markets have seen a surge in foreign investment as investors bet on potential rate cuts by the Reserve Bank of India (RBI) in December, as detailed in a MarketScreener article. These trends suggest that easing monetary policy may gain momentum across major economies in 2025.

The Fed's December decision will hinge on incoming data, including employment reports and inflation metrics. Analysts will be watching closely to see whether Miran's push for more aggressive easing gains traction within the FOMC. For now, the central bank remains in a delicate balancing act: addressing inflationary pressures while supporting economic growth amid a fragile labor market.