Fed's Miran (voter) says if he had to update the SEP forecast, he would pencil in 3 interest rates cuts in 2026 (prev. saw 4 cuts before Iran war); interest rates should be slightly below neutral

Middle East conflict:

• Does not believe that energy and the conflict will have a lasting impact that policy operates at.
• Before the Iran war, the overshoot on inflation was due to statistical anomalies and there was a situation where some sectors were contributing more to inflation
• With a policy that would respond to an energy shock, would have to believe that prices would remain higher for a 12-18 month period.

Inflation:

• Core goods inflation is expected to decrease in 2026.
• Sees inflation at target around a year from now.

Tariffs:

• Does not see tariffs driving core goods inflation.

Risks:

• Risks that would change policy view is if inflation expectations and wages rose.

Labour Market:

• Unemployment has been on a cooling trend for around 3 years now, and sees no evidence to counteract it.
• GDP and labour markets have been less correlated in recent history, possibly due to AI.
• Could be some unwinding of labour hoarding post-pandemic.
• Fed's primary objective is to target unemployment, not GDP.

Reserves:

• Fed should start increasing reserves under the current framework.
• Would rather adjust the regulatory framework to held reduce demand for reserves.
• Fed's purchases of MBS would be justified in certain crisis circumstances.

Private credit

• Have not seen evidence that private credit is a systemic risk.

Policy

• AI is likely pushing up the neutral rate of interest, though immigration and demographics are weighing it down.
• Still do not see a convincing reason to wait before cutting rates again give current forecast.