Bloomberg Talks
Federal Reserve Governor Stephen Miran Talks Rate Cuts, Inflation, Future at Fed
08 Jan 2026
Chapter 1: What is the main topic discussed in this episode?
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Chapter 2: What direction are investors seeking from the Federal Reserve?
We begin this out with investors searching for direction in a pivotal year potentially for the Federal Reserve. Fed Governor Stephen Myron doubling down on his dovish stance, calling for the central bank to cut interest rates by more than a percentage point in 2026. Governor Myron joins us now for more. Governor, good morning and Happy New Year. Happy New Year. Thanks for having me back.
It's good to see you. You've been very, very transparent about where you are on the dot plot and what your forecast is. So let's start there. Where are you for this year? Where's your dot?
Chapter 3: What is Stephen Miran's stance on interest rate cuts?
What are you looking for?
Yeah, so I'm unsurprisingly the lowest dot. I'm looking for about a point and a half of cuts. A lot of that is driven by my view of inflation. I gave a speech about this about a month ago in December at Columbia University. My view is that almost all of the excess inflation over target is due to quirks of how we calculate inflation.
So as you have talked about with many of your guests many times before, shelter inflation really, really lags a lot. And because average tenant rents have caught up to new tenant rents, because market rents have been running at a 1% rate for a couple of years now, I think it's appropriate to sort of think about underlying inflation as abstracting from that a little bit.
You know, the shelter inflation is indicative of a supply-demand imbalance from 2022, 2023, not 2027. We need to be making policy for 2027 because policy lags. And the other side of it is the portfolio management fees that I'm sure you've talked about again with many of your guests many times. Stock market went up.
Mechanically, inflation moves higher, despite many of your other guests, I'm sure, no doubt, telling you about fee compression in the asset management industry for decades. So you abstract from those two things. Underlying inflation is running at 2.3%. That's what's the noise of our target.
That sounds like an argument for neutral. You're making an argument, though, for this year, for accommodation. Where does that come from? Why are you looking for accommodative monetary policy stance coming out of Washington?
Yes, so a couple things. First of all, as I just said, underlying inflation is running within noise of our target, and that's a good indication of where overall inflation is going to be going in the medium term. But then the unemployment rate is 4.6%, right?
So that means that there's about a million Americans who don't have jobs who could have jobs without causing unwanted inflation, without causing unwanted upward pressure and inflation.
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Chapter 4: How does Miran view inflation and its impact on policy?
I don't think it's right to tell those people that they shouldn't have jobs because we're just mechanically calculating inflation in some silly way. I just don't think that makes a lot of sense. The other thing is that because we've kept policy tighter than I think it ought to be, that makes me mark down our growth forecast for the future relative to where it should be.
And so if we hadn't been keeping policy, in my view, too tight over the last year or so, it wouldn't be necessary to provide that type of accommodation.
Just quickly, you say mark down in the future. Yeah. because the Fed actually marked up GDP for 26. Where do you mean in the future?
No, so like when you look at these dots, right, in the SEP, they're projections of appropriate policy and projections of economic fundamentals like growth and inflation, conditional upon growth. appropriate policy. So my projections for growth and inflation are conditional upon getting my policy forecast, my policy projection.
If I don't get my policy projection because the rest of the committee is more hawkish than I am, then we wouldn't meet my growth and inflation projections. We'd underperform them. And so because policy has been, in my view, too tight for the last year, that means that my expectations of growth will ultimately be unsatisfied because we didn't get the policy that I wanted.
You have GDP 2.6% roughly over the next few years. Are you saying that the appropriate growth rate is something like that 2% and 2.6% and not necessarily 3% or above?
Well, so that's conditional upon getting the policy projection that I want, right? And part of the reason why it's a little bit lower than 2%
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Chapter 5: What underlying factors influence Miran's inflation outlook?
I think 2.8, 2.9 is probably more where it would be if we sort of had the right policy the entire time. Part of the reason it's a little bit lower than that is because we got to account for policy having been too tight over the last 12 months.
There's also a question about the reaction function. We've been talking about the data that we're going to be getting tomorrow. What would you have to see to change your view? I mean, if we saw, let's say, the unemployment rate go down to 4.4%, would you start to question whether 150 basis points of cuts is really necessary this year?
That's a great question. And before I answer it, let me step back a foot and say that my forecast is conditional upon shelter inflation coming down. And there's people who agree with me, by the way. You look at the research from Goldman Sachs. It's pretty similar to where I am on shelter.
They've got shelter inflation running below the pre-COVID rate by the end of the year, similar to where I have it. Where I differ from... a lot of my colleagues, again, is thinking that goods inflation is not being driven by tariffs. I don't see tariffs being driven by goods inflation. I see goods inflation, I'm not sure what's driving it. I listed a few possibilities in the speech in December.
I think the jury's still out on that one. But if I end up being right on shelter, if I end up being right on shelter, and Goldman ends up being right on shelter, and I end up being wrong on tariffs and everybody else is right on tariffs, then we're going to undershoot our target. Two-sided risk is back. And I think that people haven't really internalized that yet.
And I think it's important to appreciate that. Now, where would I be wrong? Because so much of my disinflation forecast is based upon shelter. I'm going to be wrong if market rents pick up again.
So are you saying this is all an inflation issue and not anything to do with the labor market?
No, as I said before, unemployment is somewhat above where I view the national rate. And so it's 60 basis points, a million people of unnecessary unemployment that we could reduce by having a more appropriate policy stance.
But to Lisa's point, is there a line in the sand on the unemployment rate tomorrow that would maybe have you think about this a little bit differently? What if the unemployment rate drops down 4.5 percent or even 4.4 percent?
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Chapter 6: Why does Miran advocate for an accommodative monetary policy?
And I think you understand that, of course. I also want to pick up the difference between being an economist and being a policymaker. When you say two-way risk, I think that really makes us all think about speed and the appropriate speed to adjust monetary policy when there is two-sided risk. Why do you think we should be going this fast this year in your mind to cut that aggressively in 2026?
Sure.
Sure. So same thing as I said in the last few times I've been here. We're still materially above neutral in my mind. And there's not really a reason to be materially above neutral if the labor market is on a weakening path and underlying inflation is already running close to our target and on trajectory to hit the target. There's just not a real reason to be so restrictive.
And we're running unnecessary risks on the labor market by being so restrictive. And so in my mind, it's like we're selling options for nothing. And I don't see why we're selling those options.
this just requires such a strong amount of conviction though coming out of the pandemic i think what we all learned was a massive degree of humility because there were so many things that we thought were obvious that actually things just turned out to be completely the opposite and i wonder if this year we should have the same approach to monetary policy as a monetary policy official do you have to sit here and say actually the prudent way to do things is actually to move slowly and work things out meeting by meeting because that's what i hear from other members of the committee and i'm wondering why you see things so differently
Sure.
So first of all, I'll say that I was right about inflation coming out of the pandemic.
And if you sort of go back to 2020, when I was at the Treasury Department, you know, we were arguing for a smaller stimulus package because we didn't see COVID as a similar type of recession that we had post-GFC, post-dot-com bubble, where you had persistent deleveraging, dragging on demand that caused a balance sheet recession with a persistent, slow, crappy recovery, right?
COVID was like a switch turned off, right? People stayed home, and the switch turned on when they started going out again. And so there wasn't going to be that slow recovery. And that's why we were pushing for smaller stimulus packages, because we didn't think that it merited that type of package. We were concerned about inflation picking up. So I did get that right.
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Chapter 7: What projections does Miran have for GDP growth?
Oh, I have no idea. You know, we'll see. I don't make personnel decisions. Okay. You've heard nothing at all from anybody?
No.
You know, I think that, you know, we're very clearly now getting into the new year. And the president has said in the past that he would make announcements as we got there. So, you know, I imagine we'll be getting some at some point. But, you know, I don't know anything about my future.
So I wouldn't mind it. What a position to be in. We're all sitting here waiting, just like you. Governor, thank you. It's good to see you. Thanks for having me. Thanks for being so generous with your time. The Federal Reserve Governor there, Stephen Myron.