Fed's Miran (voter) says inflation side of mandate has been so problematic due to measurement issues; job market has been in an extended streak of getting weaker; economy could use additional support from monetary policy
- Oil price surge has "spooked" people.
- Central banks usually should look through oil shock.
- Doesn't seen wage price spiral forming.
- Market inflation expectations thus far unmoved by oil surge.
- "Zero bleed through" of oil shock into inflation expectations.
- Raised headline inflation projection this year to 2.7% on oil shock.
- Fed is about 1% over neutral rate; Fed should cut toward the neutral rate this year.
- Sees lower neutral rate than colleagues but not that far out of alignment
Context
Miran’s comments highlight a potential shift in the Fed's stance as inflation measurement issues and a weakening job market suggest the need for policy support. His view that the Fed is currently above the neutral rate and should consider cuts implies a more dovish outlook that could influence market expectations regarding future rate paths and pressures on the USD, especially given the lack of inflationary response to rising oil prices.
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