Fed’s Miran Says ‘Underlying’ Inflation Close to Target

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(Bloomberg) — Federal Reserve Governor Stephen Miran again argued the central bank’s policy stance is unnecessarily restrictive on the economy, pointing to his benign outlook for inflation and warning signs in the labor market. 

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Miran said he expects shelter inflation to ease as rent increases normalize from spikes during the Covid-19 pandemic. He argued that services inflation — excluding housing, food and energy — isn’t likely to see upward pressures because of a cooling labor market. He said some drivers of services inflation, such as portfolio management fees, reflect statistical quirks rather than actual consumer experience of prices.

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“There was a large bout of inflation that resulted in an increase in prices after the pandemic,” Miran said at an event Monday at Columbia University in New York. “While American families are still rightly distraught with that experience and unhappy with affordability, prices are now once again stable, albeit at higher levels. Policy should reflect that.”

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Fed officials cut interest rates for a third consecutive time at their meeting last week, but signaled additional reductions aren’t guaranteed. A number of policymakers are concerned about inflation that has lingered above the Fed’s 2% goal, while others have focused more attention on the labor market’s slowdown. 

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Miran — who was recently appointed to the Fed by President Donald Trump — acknowledged sticky goods inflation, but argued it isn’t coming from the administration’s tariff policies. He said he expects disinflation in housing services will counter elevated price increases for goods. 

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Turning to the labor market, Miran said keeping the Fed’s policy rate unnecessarily high will lead to job losses.

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“Experience suggests that labor market deterioration can occur quickly and nonlinearly and be difficult to reverse,” he said. “In part because monetary policy lags several quarters, a quicker pace of easing policy — as I have advocated — would appropriately move us closer to a neutral stance.”

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