Economic Advisors Council Chairman Stephen Milan was interviewed on Tuesday, June 17, 2025 outside the White House in Washington, DC.
Aaron Schwartz | Bloomberg | Getty Images
Federal Reserve Governor Stephen Milan outlined why central bank benchmark interest rates should be aggressively lowered less than a week after he was seated.
Changes to tax and immigration policies, along with ease of rental costs, deregulation and tariff revenue, are creating another economic situation that allows the Fed to reduce benchmark rates by nearly two percentage points from current levels, the central bank said in a statement before economic clubs in New York.
“The Federal Reserve is entrusted with an important goal of promoting price stability for the benefit of all American households and businesses, and I am committed to bringing inflation back to 2% sustainably,” he said. “But limiting policies with most of these poses a great risk to the Fed’s employment delegation.”
Milan believes that policy changes from the White House will lower neutral levels of interest that do not limit or promote growth. Miran, heavy remarks on data and citations on theories such as the Taylor Rule and interest rate models, said current monetary policy is far more restrictive than the general attitudes among fellow policymakers.
Using standard policy rules, Miran believes that federal fund rates are at the level where banks charge each other for overnight loans, but at the level that affects various other rates. The current funding rate after last week’s cuts is between 4% and 4.25%.
“The outcome is that monetary policy is sufficient for restrictive areas,” he said. “If you leave short-term interest rates, if about 2% points are too tight, you’ll get unnecessary layoffs and unemployment.”
However, this view was well suited to Milan with the Federal Open Market Committee. With current approaches, more attention and lukewarm movement rates are lower over the next few years.
At last week’s meeting, FOMC voted to lower the quarter percentage point 11-1. Milan is the only opponent, opting for a half-point cut and placed his individual dots on the committee’s “dot plot” where it implied this year’s 1.25% point cut.
Earlier on Monday, St. Louis-born President Alberto Musalem, who prefers Milan to be a FOMC voter this year, said he has little room for further reductions. Similarly, Atlanta President Rafael Bostic, who won’t vote this year, told The Wall Street Journal he would not support further cuts this year.
President Donald Trump appointed Milan to the Federal Reserve position following the shocking resignation of former governor Adriana Kugler in early August. Like Trump, Milan was a harsh Fed critic, but he and others described the atmosphere of the meeting as joint and experts.
Milan sued his lawsuit at a low price on Monday, claiming that inflation is falling, especially in the housing market, where cooling rents that didn’t appear in the data are more apparent.
He further cited other management policies, including reduced immigration, lower business regulations and reduced taxes, and revenue generated from tariffs and revenues as layoff factors, with the impact on the fiscal deficit.
“Labor market statistics and anecdotal evidence suggest that border policy has a major impact on the economy,” he said. “The American regulatory patchwork has become a key obstacle to growth.”
The Fed and other economists continue to worry that Trump’s tariffs will raise inflation in the long term. However, Milan said, “The relatively small changes in some product prices have led to what I consider to be an unreasonable level of concern.”
However, recent inflation measurements show prices that are higher and farther away from the Fed’s 2% inflation mandate.
Milan is expected to fill the remainder of the period that expires on January 31, 2026, then return to his position as chairman of the Economic Advisors Council. He painted his speech with references to CEA research.
