Fed’s Miran dismisses inflation fears tied to Powell probe

Processing Content

• Key Insight: Fed Gov. Miran argued that a probe into the head of the central bank will not have an impact on inflation.
• Expert Quote: “I think that inflation is very much headed in the right direction.” — Fed Gov. Stephen Miran.
• What’s at stake: Market watchers expressed concern that a potential indictment of Fed Chair Jerome Powell could push mortgage rates higher and weaken U.S. assets.

Federal Reserve Gov. Stephen Miran on Wednesday pushed back against the idea that a potential indictment of Fed Chair Jerome Powell would have inflationary consequences.

Speaking at the Delphi Economic Forum, Miran said he disagrees with the argument that legal action against the head of the central bank could lead to higher interest rates — a concern recently raised by JPMorganChase CEO Jamie Dimon.

“I don’t really buy that,” said Miran. “I think that inflation is very much headed in the right direction.”

The Trump administration launched an investigation into Powell over his testimony related to renovation costs at the Fed’s headquarters, which topped $2.5 billion. The Justice Department served grand jury subpoenas to the Fed on Friday.

Miran said disinflation is already occurring in the housing sector and is expected to push shelter inflation lower. He also said he expects costs for non-shelter services to decline.

The Fed governor cautioned, however, that his outlook could change if “these conditions somehow make the real estate market much tighter and people start bidding up apartment rents like crazy.”

Some market watchers have warned that legal action against Powell could destabilize the economy, potentially weakening U.S. assets and pushing mortgage rates higher.

Dimon echoed those concerns Tuesday during JPMorgan’s earnings call, saying monetary policy should not be dictated by the president.

“While I don’t agree with everything the Fed has done, I do have enormous respect for Jay Powell,” Dimon said. “Everyone we know believes in Fed independence … and anything that chips away at that is probably not a great idea. And in my view, it will have the reverse consequences — it will raise inflation expectations and probably increase rates over time.”

Miran, who served as an economist in the Trump administration before joining the Fed, also said Wednesday that he believes the central bank should cut short-term interest rates by 150 basis points in 2026.

He said slower population growth and inflation running below prior assumptions support that view.

“That’s what my projection for appropriate economic policy is based on my conception of things that have happened to the neutral rate,” Miran said. “The 150 basis points that are my projection of appropriate monetary policy for the year are a result of my analysis of the neutral rate and the inflation path.”

In the second half of 2025, the Fed cut short-term interest rates by a total of 75 basis points, bringing the benchmark policy rate to a range of 3.5% to 3.75% as it sought to support the labor market. Fed Chair Jerome Powell signaled in December that the central bank would likely hold off on additional rate cuts in 2026 until the economic outlook becomes clearer.

Miran joined the Fed in September 2025, and his term is set to expire Jan. 31, 2026. It has been widely expected that President Donald Trump’s next pick to fill Miran’s seat could ultimately be nominated to succeed Powell when his term expires in May.

However, Miran’s tenure could be extended after some members of Congress warned they would refuse to confirm any new Federal Reserve nominees until the investigation involving Powell is resolved.