Dovish Fed governor pressed for more cuts as housing weighs the impact
Federal Reserve governor Stephen Miran warned that the central bank risks tipping the United States into recession if it stops cutting rates next year – a message closely watched by a mortgage industry still waiting for meaningful relief on borrowing costs.
Policy, he argued, remained “restrictive” even after three cuts totaling 75 basis points since September, and needed to move lower to match a softer economy.
“If we don’t adjust policy down, then I think that we do run risks,” Miran said in a Bloomberg Television interview.
He pointed to a weakening labor market as the main reason to keep easing.
“The unemployment rate has poked up potentially above where people thought it was going to go,” he said. “And so we’ve had data that should push people into a dovish direction.”
Miran’s term as governor is due to expire at the end of January, but he said he expects to stay on until a successor is seated.
“If nobody is confirmed in my seat by January 31, I assume that I will stay,” he said.
He dissented at each of the three meetings he attended, favoring half-point cuts over the quarter-point moves backed by most officials.
With the policy rate already lower, Miran said “the need for me to dissent for 50 becomes a little bit less as we come down,” but stressed that “it’s important we continue steadily reducing the policy rate.”
Mortgage and housing analysts have cautioned that rate cuts have not yet translated into a sharp drop in home loan costs.
Mortgage rates in 2025 hovered near 6.6% even after a 0.75 percentage point reduction in the federal funds rate, according to a CNBC analysis, suggesting they were “a little bit stickier than maybe you would expect from Fed policy.”
In its December outlook, the Mortgage Bankers Association projects that 30‑year mortgage rates would hold in a narrow 6–6.5% range over the next several years as the Federal Reserve nears the end of its cutting cycle in 2026.
Broader housing forecasts have pointed to only gradual relief. Mortgage giant Fannie Mae now projects home sales will increase 7.3% in 2026, down from 8.9% predicted in October and 9.2% in September.
The pullback stems partly from mortgage rate expectations. Fannie Mae predicts the 30-year fixed-rate mortgage will average 6.2% in the first quarter of 2026 before declining to 5.9% by year-end.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
