Federal Reserve Governor Calls for Swift Rate Cuts Amid Rising Unemployment

Federal Reserve Governor Stephen Miran has attributed the recent rise in unemployment to the central bank's tight monetary policy, advocating for swift and substantial interest rate cuts to prevent further job losses. In a Fox Business interview on November 25, 2025, Miran stated, "We have to recognize that the unemployment rate has been drifting higher, and that is a function of monetary policy being too tight."

Miran emphasized the urgency of adjusting the Federal Reserve's approach, warning that maintaining high interest rates could exacerbate unemployment. "My concern is that if we don't continue cutting rates and do so at a reasonably quick pace, we will be the source of continuing increases in unemployment, which is not a good thing," he added.

The U.S. labor market has shown mixed signals in recent months. In September 2025, employers added 119,000 jobs, surpassing the forecasted 50,000. However, the unemployment rate rose to 4.4%, the highest since October 2021, partly due to 470,000 individuals entering the labor force.

In response to signs of a softening labor market, the Federal Open Market Committee (FOMC) implemented two consecutive 25-basis-point rate cuts in September and October 2025, bringing the federal funds rate target range to 3.75%-4.00%. These cuts were framed as "risk-management" measures aimed at supporting economic activity amidst growing concerns about labor market weakness.

Market expectations for future rate cuts have been influenced by recent economic data. Morgan Stanley, for instance, revised its forecast, no longer expecting a rate cut in December 2025 due to stronger-than-anticipated jobs data for September. They now project rate reductions in January, April, and June 2026, which would bring the federal policy rate to between 3% and 3.25%.

Miran, who joined the Federal Reserve in September 2025 after serving as Chair of the Council of Economic Advisers in the Trump administration, has been an advocate for more aggressive monetary easing. He previously dissented in favor of larger 50-basis-point cuts during FOMC meetings. In a Bloomberg Television interview on November 21, 2025, Miran indicated he would support a 25-basis-point rate cut at the upcoming December meeting if his vote were decisive, despite his earlier preference for larger cuts.

The Federal Reserve faces the challenge of balancing inflation control with employment support. Internal disagreements, as evidenced by Miran's stance, may influence future monetary policy decisions. As the FOMC approaches its December meeting, the debate over the appropriate monetary policy response to rising unemployment intensifies. Governor Miran's call for aggressive rate cuts adds a significant voice to the discussion, highlighting the delicate balance the central bank must maintain between fostering economic growth and controlling inflation.