(Reuters) -If President Donald Trump hoped that putting a close ally at the Federal Reserve would grab headlines, White House economic adviser Stephen Miran’s dissent and way-below consensus interest rate projection on Wednesday delivered.
If the hope was to have someone on the inside to get the Fed to lower interest rates as sharply as Trump wants, Miran’s lone dissent was evidence the gambit had failed, at least for now.
Sworn in just before the Fed began its latest meeting, Miran took part in two days of debate and discussion on the state of the economy and where interest rates are best set so as to keep inflation in check while putting the labor market on a better footing.
And on his second day at the central bank, he cast the one vote in favor of a half-of-a-percentage-point rate cut. The other 11 of his voting colleagues – including two other Trump appointees who had dissented only weeks earlier at the previous Fed meeting – voted for a smaller reduction.
His dissent, though nearly as widely anticipated as the quarter-point rate cut itself, guaranteed he was highlighted in all major news coverage of the decision, and every Wall Street analyst note dissecting the move for investors.
But his support for a bigger cut and his submission of a rate-path view that showed he believes another 1.25 percentage points of cuts are warranted by year-end – far more than any other policymaker – fell on deaf ears.
“There wasn’t widespread support at all for a 50-basis-point cut today,” Fed Chair Jerome Powell said in a press conference after the meeting.
Disagreement over the right path for rates, he said, is “understandable and natural,” given the difficulty of navigating between the twin risks of rising inflation and a weakening labor market. But in the end, he said, “we came together today at the meeting and acted with a high degree of unity.”
Many analysts had expected Trump’s two other appointees – Christopher Waller and Michelle Bowman – to join Miran in dissenting. After all, both had dissented in July against the Fed’s decision then to hold rates steady. Instead they went with the majority, closing ranks in effect against the newcomer.
“His 2025 dot at 2.875% is reflective of President Trump’s push for bringing policy rates rapidly back to a more neutral setting,” wrote analysts at TD Securities of Miran’s year-end rate projection on the Fed’s so-called ‘dot plot.’
“Trump appointees Bowman and Waller did not join Miran in supporting a larger rate cut, which in our view reflected a show of support for Fed independence.”
Powell was asked what he would tell people trying to gauge the influence of a White House staffer at the central bank, which has always maintained that politics do not enter into its decisions.
“The only way for a voter to really move things around is to be incredibly persuasive and the only way to do that in the context in which we work is to make really strong arguments based on the data and one’s understanding of the economy,” Powell said. “That’s really all that matters and that that’s how it’s going to work. That’s in the DNA of the institution. That’s not going to change.”
Under the Fed’s self-imposed rules, Miran won’t have a chance to speak until Friday, when policymakers are free to air their perspectives after financial markets and regular households have had a chance to digest the Fed’s action and hear Powell’s framing of it.
At that point attention may well turn to what economic arguments Miran did make at the table.
At his confirmation hearing, Miran said there was no evidence at all that tariffs were pushing up on inflation, and that he expected the immigration crackdown to help bring inflation back down by reducing demand for housing.
Projections submitted by policymakers, however, did not reflect the addition of a forecast reflecting any lower inflation for this year, next year, or the following year than had been expected before Miran joined the Fed.
Still, his rate projections – including a dot-plot entry showing rates ought to end the year three-quarters of a point lower than any other policymaker saw as appropriate – drew fast notice among economists and across Wall Street, and a bit of shade, too.
“Miran’s dots stand out like a sore thumb, so those are going to be perceived more as signaling than any sort of indicator of where policy might actually head,” Annex Wealth Management Chief Economist Brian Jacobsen said.
“Miran Submitted a 2.9 Dot For 2025,” Andy Brenner, vice chairman of NatAlliance Securities, said in an email. “Who does that sound like? … Does not make sense.”
(Reporting by Ann Saphir; Editing by Andrea Ricci)
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