Miran Highlights Deregulation as Fresh Justification for Fed Rate Cuts Amid Economic Slowdown

Federal Reserve official Miran has publicly indicated that recent financial sector deregulation could ease credit constraints and support economic activity, offering another rationale for lowering interest rates. The remarks come as inflation pressures have eased and growth indicators have shown signs of softening in late 2025 and early 2026. Miran emphasized that reduced regulatory burdens on banks could enhance lending capacity, particularly for small and mid-sized businesses, which have faced tighter credit conditions in the past year. The central bank’s focus has shifted from inflation control to supporting sustainable growth, with the benchmark federal funds rate currently held at 5.50%. Recent data show the economy expanded at a 1.2% annualized pace in the fourth quarter of 2025, below the 2% threshold many economists consider indicative of healthy momentum. Unemployment has ticked up to 4.7%, the highest level since early 2023, while consumer confidence has declined for three consecutive months. Miran’s comments align with a broader trend among Fed officials who see policy accommodation as increasingly necessary. Market pricing now reflects a 72% probability of a rate cut in March 2026, up from 45% in December 2025. Treasury yields have responded, with the 10-year note dropping to 3.82% from a peak of 4.65% in October 2025. Financial conditions have eased, with the Chicago Fed National Activity Index improving slightly to +0.15 in January 2026. The potential shift in monetary policy could benefit corporate borrowers, especially in the commercial real estate and technology sectors, where access to capital has tightened. Mortgage rates, which peaked at 7.8% in late 2024, have since declined to 6.9%, offering relief to homebuyers and boosting housing market activity. However, the Federal Reserve remains cautious about premature easing, with officials emphasizing the need for more data before making a decision.