There’s no ‘material inflation from tariffs,’ says new central banker Stephen Miran

By Bryan Mena, CNN

Washington (CNN) — President Donald Trump’s widespread tariffs aren’t boosting inflation, so interest rates should be lowered quickly to prevent America’s labor market from deteriorating, Federal Reserve Governor Stephen Miran said Friday in his first public comments as a monetary policymaker.

The Fed on Wednesday announced a quarter-point rate cut, the first reduction in nine months, in an attempt to prevent unemployment from surging. Fed Chair Jerome Powell in a news conference described it as a “risk management cut,” suggesting the Fed isn’t behind the curve.

Miran, however, disagrees. He was the lone dissenter on the Fed’s latest decision, favoring a large, half-point cut instead. His appointment has brought a new voice to the Fed — one with unconventional views on the economy — in support of aggressive rate cuts in the months ahead.

In an interview with CNBC Friday morning, Miran played the down the potential impact from Trump’s tariffs, basing that as his main argument for why he backed a half-point cut, while mentioning the precarious state of the job market.

“I don’t see any material inflation from tariffs,” Miran said, adding that the longer that borrowing costs “stay very restrictive” means “the greater the risks build up… to the employment mandate.”

Miran, Trump’s top economic adviser, was sworn in an hour before the Fed’s meeting began on Tuesday, he told CNBC, after Republicans swiftly shepherded his confirmation.

Whenever a Fed governor dissents, they typically release a statement through the central bank two days later laying out their rationale, but Miran is choosing to detail his reasoning at an upcoming speech in New York on Monday.

Miran’s first days as a Fed governor

The newly appointed Fed governor is getting settled in, he said, telling CNBC: “I literally just got here a few days ago.”

Miran said that Trump called him the day he was sworn in to congratulate him, adding that the president didn’t ask him to “commit to doing any particular actions.” Miran reiterated that he will form independent opinions about the economy.

“Everybody was extremely welcoming” at the Fed after he was sworn in, Miran said, despite the unprecedented pressure Trump continues to exert on the central bank, including an ongoing push to oust Fed Governor Lisa Cook.

“It was a very collegial environment, and I really appreciated that, and that includes Governor Cook,” Miran said.

On Monday, Miran is scheduled to deliver a keynote speech at a luncheon hosted by the Economic Club of New York, during which he will “give a full accounting for my economic views and walk through in meticulous detail the economics and the arithmetic behind getting to those numbers.”

When Fed officials released their latest so-called dot plot on Wednesday — a graph of their projections for their benchmark lending rate in the coming years — there was one projection that was far below the other estimates for 2025, suggesting that person estimates aggressive rate cuts by the end of the year. Miran confirmed that dot was his.

“That was me,” he said.

The US labor market and the Fed

By many measures, America’s labor market has weakened since the beginning of the year.

Job growth has been anemic; there are now more unemployed people seeking work than there are job openings; and in August, the number of people unemployed for more than 26 weeks reached its highest level since November 2021.

But those signs ultimately weren’t enough to prompt the Fed to deliver the half-point cut Miran voted for. Powell told reporters that while the labor market has softened, it’s not all doom and gloom.

“Let’s remember though, the unemployment rate’s 4.3%. The economy is growing at 1.5%. So it’s not a bad economy, or anything like that,” Powell said “We’ve seen much more challenging economic times.”

Powell has frequently referred to the importance of the unemployment rate in policymakers’ perception of the labor market. Last year when the Fed delivered a large, half-point cut, it was mostly in response to the fast increase in unemployment over a short period of time.

That’s not the case this time around. Since January, the unemployment rate has remained within a narrow range between 4% and 4.3%.

But the Fed chief on Wednesday warned that if layoffs do start to pick up, those people who would find themselves out of a job will likely struggle to find work.

“The concern is that if you start to see layoffs, there won’t be a lot of hiring going on,” Powell said.

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