Stephen Miran, the new member of the Fed Board of Governors, who was reportedly appointed by President Donald Trump because of his closeness to him, made remarkable statements about the US economy and monetary policy.
Speaking to Bloomberg Television, Miran said he was not shy about offering different views from other members of the central bank and that there was only one condition that would change his thinking on the current inflation outlook.
Fed Governor Stephen Miran said there’s only one scenario in which he could change his current positive inflation outlook: an unexpected, sudden rise in housing costs. Miran argued that housing is the “single largest component” of the inflationary process, but added that his “neutral inflation forecast” would have to be adjusted if there were a shock that significantly pushed housing costs up.
He stated that he expected a significant decline in housing-related services inflation, considering that the increase in housing costs was largely due to population shocks and that the effects of these shocks were reversing.
Miran also clarified misconceptions about his position on the neutral interest rate (r-star). He stated that the view that the neutral interest rate is zero is incorrect, explaining that his calculations indicate that the rate is not zero, but around half a percent (0.5%).
Miran, who noted that he does not hesitate to frequently present unconventional and “non-consensus” ideas, said, “I see it as part of my job to occasionally bring fresh and non-consensus ideas to an established way of thinking.”
Miran added that after his inauguration, President Trump called to congratulate him but “never asked him to take any specific policy action.”
*This is not investment advice.