Bloomberg Talks
Federal Reserve Governor Stephen Miran Talks Oil Prices, Monetary Policy
23 Mar 2026
Transcript generated automatically by AI and may contain errors.
Chapter 1: What is the main topic discussed in this episode?
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Subject to credit approval, Apple Card issued by Goldman Sachs Bank USA, Salt Lake City branch. Terms and more at applecard.com. Bloomberg Audio Studios. Podcasts. Radio. News. So in the market right now, equities near session highs up 2% on the S&P. This bond market, some wild moves earlier on this morning. Yields through 4% at the front end of the curve.
Highest yield we've seen since last summer. 385 now because we've pulled back following those headlines. We're down five basis points on the session. We've priced out the easing. At one point, we were talking about pricing and rate hikes. at the Federal Reserve.
Let's have that conversation right now with the Federal Reserve Governor Stephen Myron, the lone voice dissenting at last week's FOMC meeting, continuing his push for interest rate cuts. Governor Myron joins us now for more. Steve, good to see you. Good morning. Thanks for having me back. Governor, where do we begin with these headlines right here?
As a policymaker, as an official, when things are moving this fast, what do you do?
Well, look, we've already had some whiplash this morning. And I think that underlines that we shouldn't be making policy based on short-term headlines, right? We should wait for all the information to come in before really changing our outlook. And I think it's just still premature to have a clear view about what this is going to look like as you look 12 months out.
And because of monetary policy lags, we really need to be looking a year to a year and a half out. And there's just not enough information yet about what that looks like.
Communication in the near term, of course, matters. The chairman in the news conference last week really vowing to anchor inflation expectations. Do you think that's a worthwhile pursuit at this point?
I do. Look, you know, traditional central banking, Federal Reserve wisdom is that oil shocks hit headline inflation. but they don't really pass that much into core by as much as they do into headline. And the two ways that you would want to respond to it, and so therefore you typically look through an oil shock.
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Chapter 2: What insights does Federal Reserve Governor Stephen Miran share about oil price shocks?
I've just had one eye on December over the last three weeks or so. That's gone from the 60s and threatening to break out into the 90s at one point earlier on this morning. That's a change. That's a real step up, no?
It has. And I boosted my, you know, in the summary of economic projections, I boosted my inflation dot for the end of the year to 2.7%, reflecting that in part, right? So there is some expectation of higher headline inflation. However, as I said before- I think it's way too early to draw conclusions that it's bleeding beyond headline inflation in a way that matters from Ontario policy.
Don't forget, higher oil prices also depress demand. They take money out of the pockets of consumers that we're spending on other goods and services and redirects it towards gas and other energy costs. And that depresses demand and causes unemployment to move a little bit higher. That offsets some of the increase in inflation.
One of your colleagues this morning, Austin Goolsbee at the Chicago Fed, speaking to the press saying, we could see a circumstance where we'd need to raise interest rates. How high is the bar to raise interest rates?
Chapter 3: How should monetary policy respond to short-term economic changes?
What kind of circumstances would you personally need to see?
Yeah, so I just laid out a couple of them before, right? If it looks like the oil shock is bleeding into inflation expectations beyond the first year, then you get really concerned about second round effects. Or it looks like you're starting to cause a wage price spiral. Then you get really concerned about second round effects.
First round effects are not something you traditionally respond to as a central bank. Now, I'll say one thing beyond that. which is that these oil shocks have been things that this Fed has looked through for a long time, right? It would be highly unusual for the Fed to start looking through them now.
And when you think about what happened in 2021 and 2022, we did have negative supply shocks, like the oil shock from the Russia-Ukraine invasion. But in my view, part of the reason why it was able to reverberate through the economy the way it did was because policy settings at the time were very different. Monetary policy and fiscal policy were at all-time historical accommodative levels.
We were doing $120 billion a month of QE. We were doing $2 trillion fiscal packages at a time. That's not the case right now. We're not hitting the gas on demand that would interact with the higher oil price in a way that would reverberate these prices through the economy now. That's not the case at all.
But right now, we're just seeing price spike on paper market. But what's happening in the physical market is actually a void. We are seeing not just shut-ins, but some of these installations going to take years to rebuild. At what point does that start to potentially de-anchor inflation expectations?
Yes. So you'd want to see the oil price shocks start to reverberate through supply chains and pushing up prices more broadly.
We are, though, in terms of airlines, diesel. That means that it's going to be more expensive in terms of some goods and services that are delivered by truck.
Yeah, there's been a few instances, but you want to see that in a broad-based way that starts to bleed into core inflation and boost it in a way that's sort of not just a one-off time, but you start to see really second-round effects that are concerning for the longer term. And if that starts to happen, then you start to get concerned about inflation.
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Chapter 4: What is the significance of inflation expectations in monetary policy?
So as I said before, traditionally, you would look through an oil price shock like this, which means that my policy outlook from before is unchanged. And my policy outlook from before would be gradual cuts of interest rates. I had about six cuts for the year at the last SEP in December.
I reduced that to four cuts for the year in response to the inflation data that we received between the two projection periods. So I'm maintaining my outlook that I had- You just said the outlook doesn't change, Governor.
Forgive me for jumping in.
Chapter 5: How do oil shocks impact core versus headline inflation?
But the balance of risks around the outlook should change. That should change off the back of energy shock. Isn't that a fair summary of where we should be?
Well, the balance of risk does change, but I think it's actually changed on both sides equally. The inflation risks have got a little more concerning, but the unemployment risks have gotten more concerning, too, because the negative supply shock that is the oil price is also a negative demand shock.
You're taking money out of goods and services that are not energy that would have been spent on those goods and services anyway. And I view the labor market as continuing its gradual softening trend of the last three years. That trend has been in place for three years. I've seen nothing that would convince me the trend has stopped.
That's a very powerful medium-term trend that's been in place for several years now. And taking money out of goods and services that's not energy to devote to higher energy prices is exactly the type of thing that worries me that that trend might accelerate. So the balance of risk changed, but I think it got worse on both sides. I don't think it changed asymmetrically.
Governor, it's good to see you. Thanks for making time for us, as always. We appreciate it, sir. Governor Stephen Martin there of the Federal Reserve on the argument for lower interest rates following a major energy shock. This means you could be earning daily cash on just about anything, like a slice of pizza from your local pizza place or a latte from the corner coffee shop.
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Chapter 6: What are the risks of a wage-price spiral due to rising oil prices?
And it fits into your morning.
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