Fed's Miran Breaks Ranks: Calls for Over 100 Basis Points of Cuts in 2026
Tuesday, January 06, 2026
Dear Valued Reader,
Federal Reserve Governor Stephen Miran is making waves, calling for over 100 basis points of rate cuts in 2026 because policy is "clearly restrictive and holding the economy back." His aggressive stance sharply contrasts with other Fed officials who suggested this week that rates may already be near neutral. The divide reveals deep disagreement within the Fed about whether current policy restrains growth or has already reached the appropriate level.
Key Takeaway
Miran argues policy is clearly restrictive and needs well over 100 basis points of cuts in 2026. Other officials including Richmond's Barkin and Minneapolis' Kashkari say rates are already close to neutral at 3.5%-3.75%. The FOMC's median projection shows just one cut for 2026, suggesting Miran is an outlier calling for much more aggressive easing.
Miran's Aggressive Case
"I think it's very difficult to argue that policy is about neutral. I think policy is clearly restrictive and holding the economy back," Miran told Fox Business Network Tuesday. His call for "well over 100 basis points of cuts" in 2026 stands far beyond the Federal Open Market Committee's median projection of just one cut for the year.
Miran has consistently advocated for aggressive easing since September, when he went on leave as White House Council of Economic Advisers chair to fill a Fed governor term ending this month. His temporary status on the board may contribute to his willingness to stake out such a dovish position.
The Other Side
Other Fed officials are sending very different signals. Richmond Fed President Tom Barkin said Tuesday that current rates are "within the range of its estimates of neutral," referring to December's projections. Minneapolis Fed chief Neel Kashkari went further Monday, saying his guess is "we're pretty close to neutral right now" given resilient economic growth.
The Fed's benchmark currently sits at 3.5%-3.75%. FOMC members' neutral rate estimates range from 2.6% to 3.9%, with a median of 3%. If most officials believe we're at or near neutral, that argues against the aggressive easing Miran advocates.
The Delicate Balance
Barkin articulated the challenge facing policymakers: "Going forward, policy will require finely tuned judgments balancing progress on each side of our mandate. With the hiring rate low, no one wants the labor market to deteriorate much further; with inflation above target now for almost five years, no one wants higher inflation expectations to get embedded. It's a delicate balance."
This framing suggests caution about aggressive cuts. If inflation remains above the 2% target after nearly five years, reducing rates too quickly risks embedding higher inflation expectations even as the labor market shows concerning weakness.
What This Divide Means
The gap between Miran's view and other officials' positions reveals fundamental disagreement about economic conditions. Miran sees clear restrictiveness holding back growth, while others see rates appropriately calibrated near neutral.
This isn't just academic debate—it has concrete implications for 2026 monetary policy. If Miran's view gains traction, markets could price in much more aggressive easing than currently expected. If the majority view that rates are near neutral prevails, the single cut projected for 2026 may be all we get unless economic data deteriorates significantly.
Market Implications
Markets must navigate this policy uncertainty. Fed officials signaled last month that additional near-term cuts aren't guaranteed, creating a higher bar for easing than Miran's comments suggest. His aggressive stance may represent a minority view on the committee rather than a signal about future policy direction.
For investors, Miran's comments could provide false comfort that substantial easing is coming. His temporary governor status and history of dovish advocacy since joining from the White House suggest his views may not be representative of the broader committee.
The more important signals come from permanent voting members like Barkin and Kashkari, both of whom suggest rates are already near appropriate levels. Their caution about both labor market deterioration and embedded inflation expectations argues for measured policy adjustment rather than aggressive cuts.
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Miran's term ends this month, potentially removing one of the Fed's most vocal doves from the conversation. His replacement's views on neutral rates and appropriate policy could signal whether the Trump administration seeks to push the Fed toward more aggressive easing or accepts the current measured approach.
Economic data will ultimately determine whether Miran's concerns about restrictive policy prove correct or whether officials like Barkin and Kashkari are right that rates are appropriately calibrated. Labor market deterioration would strengthen the case for cuts, while persistent inflation would vindicate those urging caution.
Stay Connected Thank you for reading. I'll continue monitoring Fed policy debates and their implications for markets and the economy.
Until next time,
FindBetterTrades