Fed Governor Miran Urges a Bold December Cut: Calls for 50 bps, Minimum 25 bps

In a notable shift in the policy debate at the Federal Reserve, Governor Stephen Miran on Monday declared that current inflation figures are already outdated and argued that the time is ripe for a meaningful rate cut in December. According to Miran, a 50-basis-point cut is appropriate, with 25 basis points being the bare minimum he could accept. 

Miran emphasised that the lag in published inflation data means the Fed is reacting to the past rather than anticipating the future. He told press interviewers that “inflation data are backward-looking” and that the economic picture already shows meaningful easing of price pressures. 

At the same time, Stephen Miran pointed to signs of softening in the labour market and credit conditions, suggesting the economy may be more sensitive to current policy than standard models assume. He argued that policy may already be too restrictive in light of these shifts. 

Why Miran’s Position Matters

Miran’s call for a half-percentage-point cut in December stands in contrast to the more cautious tone among many Fed officials, who have called for “patience” given inflation remains above target. 
His views matter because:

• He dissented at the October policy meeting, favouring a 50 bps cut while the committee approved 25. 

• By arguing the inflation gauges are stale, Miran signals an orientation toward more forward-looking policymaking, which could shift expectations of future rate paths.

• Markets are already pricing in a cut in December, albeit probably a smaller one; Miran’s advocacy for 50 bps may raise expectations for a larger move. 

What’s the Current Economic Backdrop?

• The fed funds target range was lowered to 3.75%–4.00% following the October meeting. 

• Inflation remains above the Fed’s longer-run target of ~2%, raising concerns that easing too soon may reignite inflation pressures. 

• At the same time, labour market indicators suggest some loosening momentum, increasing downside risks to employment and growth. 

• Miran argues that the “neutral” interest rate (r*) may be lower than many assume, meaning policy may already be on the restrictive side.

The Implications of a 50 bps Cut

If the Fed moves with a 50-basis-point cut in December, the possible effects could include:

• Lower borrowing costs for consumers and businesses potentially boosting credit, investment and activity.

• A more dovish signal from the Fed could weaken the U.S. dollar and spur foreign investment flows into risk assets.

• Inflation expectations might ease, giving the Fed more room to relax policy further if needed.

• However, the risk is that easing too early could undermine the Fed’s inflation-fight credibility, especially if inflation re-accelerates.

Risks & Areas of Caution

Miran himself noted his view is conditional “absent new information that would alter my forecasts …” he favors the move. Some key risks:

• If inflation shows renewed strength, the case for a big cut weakens substantially.

• The Fed is operating in a “meeting-by-meeting” regime given data uncertainty (including delays due to governmental issues).

• Markets may have already priced in some easing, so the difference between 25 bps vs 50 bps could alter expectations significantly.

In Summary

Stephen Miran’s push for a 50 basis-point cut in December signals a sharper turn toward easing at the Fed, anchored in his view that inflation is already coming down and that current policy may be overly restrictive. Whether the committee follows his argument remains to be seen but his stance raises the bar for a meaningful move and shifts market expectations ahead of the December meeting.

FAQs

Q1. What exactly is Miran suggesting for the December meeting?
A1. He is advocating for a rate cut of 50 basis points (0.50%) at the December meeting of the Fed. He also says if that is not possible, then at least a 25 basis-point cut (0.25%) should happen. 

Q2. Why does he believe the inflation data are “outdated”?
A2. Miran argues that the inflation numbers published by the Fed and other agencies are lagging reflecting what happened months ago whereas the present economic dynamics (particularly falling unit labour costs, softer wages, housing cost deceleration) indicate inflation is already easing. Thus, he believes policy should anticipate rather than follow the published data.

Q3. Is the Fed definitely going to cut rates in December based on his comments?
A3. No. While Miran strongly supports a cut, he acknowledges it is conditional on no new adverse data. The Fed’s decision will depend on the full set of incoming economic indicators and the committee’s broader assessment. 

Q4. What are the possible downsides of making a 50 bps cut now?
A4. The key risks include: reopening inflation risk if price pressures remain; undermining the Fed’s credibility in the inflation fight; and giving a signal of premature easing if the labour market or growth rebounds unexpectedly.

Q5. How might markets react if the Fed follows Miran’s recommendation?
A5. A big cut could boost asset markets, reduce yields on short-term instruments, weaken the U.S. dollar, and encourage risk-taking. Conversely, if the cut is only modest or delayed, markets might view it as policy caution and adjust expectations accordingly.