Outgoing Fed Governor Signals Big Rate Cuts in 2026 to Support Jobs
As 2026 begins, the debate over interest rates is heating up inside the Federal Reserve. Outgoing Fed Governor Stephen Miran said Thursday that the central bank should move aggressively this year, calling for as much as 150 basis points in rate cuts to help stabilize and strengthen the U.S. labor market.
Speaking on Bloomberg Surveillance, Miran said the Fed has significantly more room to lower borrowing costs than many policymakers currently believe. His argument centers on inflation, which he sees as already close to the Fed’s long-term goal.
“I’m looking for about a point and a half of cuts,” Miran said. “Underlying inflation is running very close to our target, and that tells me where inflation is likely headed over time.”
Miran estimates that core inflation is effectively around 2.3%, only slightly above the Federal Reserve’s 2% target. From his perspective, that gives policymakers flexibility to shift their focus toward supporting job growth without risking a renewed surge in prices.
His comments follow earlier remarks on Fox Business, where he said that “well over 100 basis points” of cuts could be justified this year.
According to Reuters, Miran’s outlook aligns with the most aggressive projection released after the Fed’s December meeting. One estimate from within the Federal Open Market Committee showed the federal funds rate falling to between 2.00% and 2.25% by the end of 2026—a sharp drop from today’s 3.50% to 3.75% range.
Pressure is also coming from the labor market. NBC News reported that the U.S. added just 50,000 jobs in December, closing out the weakest hiring year since the pandemic. Excluding 2020, 2025 marked the slowest pace of job growth since the 2009 financial crisis.
Miran pointed to that data as a warning sign, arguing that cautious hiring and slowing momentum justify faster rate cuts.
Politically, the comments come as scrutiny on the Fed continues. Miran is currently serving while on leave from his role as a senior economic advisor to Donald Trump, who has repeatedly called for deeper and faster rate cuts.
While Miran emphasized that his stance is data-driven, his remarks highlight how intense—and divided—the debate over interest rates may become as 2026 unfolds.
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