Federal Reserve Watch for Sept. 22: Federal Funds Rate Should Be in Mid-2% Range Due to Lower Immigration, Trade Policy, Miran Says

02:06 PM EDT, 09/22/2025 (MT Newswires) -- Fed Governor Stephen Miran (voter) said that when non-monetary factors such as reduced immigration and Trump administration trade policies are taken into consideration, monetary policy models suggest that the federal funds rate should be in the mid-2% range rather than the current 4.00% to 4.25% range, and that the discrepancy poses a danger to labor market conditions.

St. Louis Fed President Alberto Musalem (voter) said that there could be limited room to lower rates further before policy becomes overly accommodative, cautioning against putting too much emphasis on labor market weakening at the expensive of inflation, or vice versa.

Recent comments of note:

(Sept. 19) Fed Governor Stephen Miran (voter) said in an interview with CNBC that he does not see a large impact on inflation from the Trump Administration's tariffs and emphasized the slowing of the job market as a reason to cut interest rates rapidly.

(Sept. 17) Fed Governor Powell (voter) said economic growth has moderated and demand for labor has declined, while goods inflation has picked up, though less than expected a few months ago.

(Sept. 17) The Federal Open Market Committee lowered the federal funds rate by 25 basis points at its meeting to a range of 4.00% to 4.25%. The updated Summary of Economic Projections now sees two more rate reductions in 2025, compared with only one more in the last SEP. There is one cut seen in 2026 and another in 2027. Risks to employment have risen, the statement said, though changes in the SEP suggest slightly lower unemployment readings over the next two years along with higher inflation and GDP growth expectations.

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