Stephen Miran, the most dovish of all officials on the Federal Reserve’s rate-setting committee, acknowledged this week that he revised his interest rate target upward in response to concerning inflation data.
“I boosted my policy rate by half a percent, not due to oil and Iran, but due to the inflation data that we received,” Miran said Wednesday at the Digital Asset Summit in New York, according to Bloomberg.
Miran said a full percentage point of rate cuts is still appropriate in 2026, Bloomberg reported, but the revised policy stance is notable. Since taking office as a temporary Fed governor in September 2025, Miran voted for a lower policy rate than the majority of his colleagues at all five monetary policy meetings.
The Fed held interest rates steady at its March meeting, with only Miran dissenting in favor of a quarter-point rate cut. Since then, the inflationary pressures of the war in Iran have led to increasing pessimism that the Fed will cut rates at all in 2026, with some interest-rate speculators betting on a Fed rate hike.
During a separate event at the Economic Club of Miami this week, Miran delivered a speech entitled “Prospects for Shrinking the Fed’s Balance Sheet,” with the headline thesis being that the central bank “should aim for as small a footprint in markets as possible to minimize government-induced distortions, including funding market disintermediation.”
Calling balance sheet shrinkage a “solvable challenge,” he argued that a smaller Fed balance sheet “better protects the boundaries between monetary and fiscal policy by preserving the duration profile of the public debt as a fiscal policy item, keeping the Fed out of the credit allocation game across sectors, and reducing interest payments on reserve balances, which some in Congress view as a subsidy to the banking system.”
Those sentiments generally align with the thinking of Kevin Warsh, the nominee to replace current Fed Chair Jerome Powell when his chairmanship term ends in May.
Last fall, Warsh argued in an op-ed that the Fed’s “bloated balance sheet, designed to support the biggest firms in a bygone crisis era, can be reduced significantly.”
Warsh’s nomination remains held up in Senate limbo as a legal matter involving Powell works its way through the court process. Miran’s status as a temporary Fed governor is also up in the air as a result, as it remains unclear whose board seat Warsh would fill if he receives Senate confirmation.
