<\/p>\n
Fed Governor Stephen Miran, President Donald Trump\u2019s top ambassador for drastically lowering interest rates since joining the central bank last fall, is moving on.<\/p>\n
Miran submitted his resignation letter to the president May 14, which said it was effective when Kevin Warsh is sworn in as the next Chair of the central bank.<\/p>\n
The letter also outlined Miran\u2019s accomplishments during his temporary tenure, especially his insistence on the appropriate monetary policy that the Fed must adopt to counteract biases in the way it measures inflation.<\/p>\n
\u201cIf the Federal Reserve doesn’t adjust for these errors, it will run unemployment higher than it has to, fighting fake rather than real inflation. I have argued forcefully against this dynamic,\u2019\u2019 the letter said.<\/p>\n
Fed\u2019s mandate requires a tricky balance<\/p>\n
The Fed\u2019s dual mandate from Congress requires maximum employment and stable prices.<\/p>\n
Lower interest rates support hiring but can fuel inflation. This risks fueling further inflation, potentially leading to an inflationary spiral.Higher rates cool prices but can weaken the job market. This increases borrowing costs and further stifles economic activity.<\/p>\n
Miran addresses Iran War\u2019s energy shock<\/p>\n
Miran outlined his view of the appropriate policy response to a surge in inflation driven by a supply shock, such as today\u2019s soaring oil prices, in a May 15 interview with CNBC.<\/p>\n
He said it takes roughly 12 to 18 months for changes in Fed policy to affect the economy. That sets limits on the kind of price changes that the Fed should be concerned about today, he said.<\/p>\n
Consider a clothing company that has had to raise prices to cover the cost of tariffs, Miran said.<\/p>\n
\u201cIf you think that a higher tariff is going to boost clothing prices today, there\u2019s nothing you can do about that with monetary policy,\u201d Miran said.\u00a0<\/p>\n
Related: BofA drops blunt warning about Fed rate cuts<\/p>\n
The same goes for the Iran War\u2019s oil shock, he said. It may push up individual prices today, but the kind of inflation the Fed should care about is an ongoing, upward trend in prices, not one-off events.<\/p>\n
\u201cThat\u2019s the thing with supply shocks, is that you need to be forecasting more supply shocks,\u201d he said.<\/p>\n
Miran\u2019s departure makes room for Warsh<\/p>\n
Miran\u2019s exit makes room on the seven-member Board of Governors for Warsh since outgoing Chair Jerome Powell is staying on the board indefinitely pending the resolution of the administration\u2019s legal attacks on him and the central bank.\u00a0<\/p>\n
Powell\u2019s term as Chair ended May 15, and his term on the board ends in January 2028.\u00a0<\/p>\n
The Fed announced late May 15 that the Board of Governors named Powell chair pro tempore pending Warsh\u2019s swearing-in ceremony, which has yet to be scheduled.<\/p>\n
This temporary action to name the incumbent as chair pro tempore is consistent with past practice during similar transitions between chairs.<\/p>\n
Miran pushed for rate cuts at every FOMC meeting<\/p>\n
The Federal Open Markets Committee, in a decisive 8-4 vote on April 29, held the benchmark Federal Funds Rate steady at 3.50% to 3.75%.<\/p>\n
Fed watchers agree that the hawkish tea leaves spilling out of the most divisive vote in over 30 years indicated that three of the dissenters did not believe it was appropriate for the FOMC to signal that the next interest rate action could be to lower rates while inflation risk ticks up from the energy shocks of the Iran War.<\/p>\n
Not Miran.\u00a0<\/p>\n
For the sixth time since joining the Board of Governors in September — after Fed Governor Adriana Kugler abruptly resigned because of family members\u2019 stock trading improprieties — Miran voted for a rate cut.<\/p>\n
Even when the Fed voted to cut rates, as it did in its last three meetings in 2025, Miran dissented in favor of larger ones.<\/p>\n
\u201cI\u2019ve laid out my math,\u201d he said. \u201cI\u2019ve always done what I think is right.\u201d<\/p>\n
Miran\u2019s appointment raised concerns about Fed independence<\/p>\n
Miran was chair of the White House Council of Economic Advisers when Trump named him to fill Kugler\u2019s seat in August 2025.\u00a0<\/p>\n
Miran initially took a leave of absence from that role, finally resigning in February.\u00a0\u00a0<\/p>\n
His appointment raised concerns inside and outside of the Fed as an accelerated attempt by Trump to drastically reduce interest rates to 1% or lower.\u00a0<\/p>\n
This threat to Fed independence rattled economists and global markets.<\/p>\n
Miran said he was valuable to the president because he looked at the economic evidence and concluded that interest rates were too high.<\/p>\n
In his resignation letter, he emphasized that given monetary policy lags, policymaking needs to be forward-looking and begin to incorporate reforms immediately.<\/p>\n
This approach mirrors what Warsh has been promoting — a Fed “regime change” — since he resigned from the Board of Governors in 2011 over a policy dispute.\u00a0\u00a0<\/p>\n
Miran\u2019s background includes public, private sectors\u00a0<\/p>\n
Miran, 42, previously worked as a senior strategist at Hudson Bay Capital Management and a senior fellow at the Manhattan Institute for Policy Research.\u00a0<\/p>\n
From 2020 to 2021, he served as senior adviser for economic policy in the U.S. Department of the Treasury.\u00a0<\/p>\n
He worked in financial markets for a decade before joining the Treasury.<\/p>\n
Miran received a B.A. in economics, philosophy, and mathematics from Boston University and a doctorate in economics from Harvard University.<\/p>\n
He told CNBC he currently has no plans to return to the Fed.<\/p>\n
Related: Hot inflation report throws cold water on Fed rate cuts<\/p>\n
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