- Miran supports aggressive Fed rate cuts, downplaying inflation risks.
- Fed officials remain divided on future rate cuts amid inflation concerns.
- Markets price in 94.6% chance of 25bps rate cut, driving Bitcoin’s surge.
Federal Reserve Governor Stephen Miran has reiterated his stance on inflation and monetary policy, expressing more optimism about the inflation outlook than many of his colleagues. In a recent fireside chat at the MFA Policy Outlook, Miran affirmed his belief that the Federal Reserve should adopt a forward-looking approach to its monetary policy, suggesting that the data does not indicate rising inflation. His remarks come during a broader divide within the Federal Reserve over the future direction of interest rates and concerns about inflation.
Miran’s comments at the MFA Policy Outlook highlighted his positive view on inflation compared to other Federal Reserve officials. He stated that, in his view, there are no signs of inflation increasing and that the focus should shift toward managing potential risks in the labor market. This view aligns with his continued push for aggressive Fed rate cuts, as he advocates for lowering the policy rate by 50 basis points to reach a neutral stance.
His stance contrasts with the views of several other Fed officials, who remain concerned about inflation, particularly in light of external factors such as the Trump tariffs. Miran, however, believes that the risks of inflation from these tariffs are overstated and that the current data does not support those concerns. Instead, he advocates for rate cuts to address potential weaknesses in the labor market, arguing that the current monetary policy is too restrictive.
Fed Divided on Future Rate Cuts
The Federal Reserve remains divided on the path forward for monetary policy. Some Fed members, including Governors Chris Waller, Michelle Bowman, and Miran, are in favor of lowering interest rates to address labor market concerns. Meanwhile, others, including Fed Chair Jerome Powell, have expressed caution, citing the ongoing risks posed by inflation and the impact of external factors, such as tariffs.
Kansas City Fed President Jeffrey Schmid also signaled his opposition to further rate cuts, emphasizing that inflation remains a significant concern. He supported a rate cut during the September FOMC meeting but noted that the inflation outlook would need to be carefully monitored going forward.
Despite the division within the Federal Reserve, the financial markets are pricing in a 94.6% chance of a 25 basis point rate cut at the upcoming October FOMC meeting. This expectation is driving optimism in the markets, with Bitcoin reaching a new all-time high above $126,000.
