Fed's Miran says inflation picture has deteriorated — but still favors multiple rate cuts this year
Fed's Miran says inflation picture has deteriorated — but still favors multiple rate cuts this year
Jennifer SchonbergerThu, April 16, 2026 at 7:01 PM UTC
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Federal Reserve Governor Stephen Miran suggested on Thursday that he’s become slightly more hawkish because inflation looks a bit stickier and he now sees less reason for accommodative monetary policy than he once did.
Miran said the inflation picture has worsened since December, though not so much because of the war in Iran. It’s what he’d seen in the few months before the war broke out. Miran said the underlying composition of inflation has become less favorable.
“Some other sectors started contributing more, and so that … makes it a little bit more problematic than it was just at the beginning of the year,” Miran said at the Washington Economic Festival in D.C.
Stephen Miran at the Delphi Economic Forum Lecture in Athens, Greece, Jan. 14, 2026. (REUTERS/Louisa Gouliamaki) (Reuters / REUTERS)
Miran has been an outlier among his Fed colleagues since President Trump appointed him to the central bank last September to fill a vacancy, consistently favoring bigger and more frequent interest rate cuts.
While traders are pricing in no rate cuts in 2026, and the Fed’s own consensus favors one cut, Miran has adjusted his outlook from four rate cuts this year to three.
Read more: How jobs, inflation, and the Fed are all related
From below neutral to neutral
At the same time that inflation data showed deterioration, Miran pointed to some slightly better job market data.
The shift in the data has moved him from advocating for interest rates below neutral to neutral, a level meant to neither boost nor slow economic growth.
While he still sees the overall direction of the job market continuing to cool, given the inflation picture, he said, “Those two things together would suggest to me that interest rates should probably be slightly below neutral.
“But given the risks to both sides, I said, OK, let's just go to neutral instead.”
Miran said he thinks the current level of the Fed’s benchmark interest rate of 3.5%-3.75% is a full percentage point above neutral now.
Add to that the uncertainty from the Iran war, and Miran said he has “a little bit less confidence” in economic forecasts.
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“And now we have an energy shock. It runs the risk of making that gradual cooling trend (in the job market) a little bit less gradual,” Miran said.
Yet Miran does not see any long-lasting impact on inflation from the spike in energy prices adding to higher inflation risk.
“If you thought that price levels were going to be moving higher, not now, not next month, not in June, but 12 to 18 months from now when the monetary policy lags have passed and monetary policy can actually affect the economy, then you have a reason for responding to the energy,” he said.
“At this moment, I don't have a reason for thinking that the war has changed the outlook for inflation” 12 to 18 months from now, he continued.
Miran still thinks core goods prices will drop, but not as far as pre-pandemic, and he expects housing services inflation to continue to drop as rents drop.
For Miran to respond to higher energy prices, he said he’d need to see expectations of inflation moving higher beyond the one-year horizon or wages to start moving higher, but he doesn’t expect that, given the softness in the job market right now. The other factor that could cause him to react is higher energy prices working through the supply chain, which he doesn’t see.
However, New York Fed president John Williams said Thursday that evidence of higher energy prices being passed along has begun to emerge. He said while the data has not pointed to significant broad-based supply-chain bottlenecks yet, he is seeing increasing disruptions related to the supply of energy and related goods. Williams noted that not only are higher energy prices showing up in rising fuel costs, they are also being passed on in the form of higher airfares, groceries, fertilizer, and other consumer products.
For Miran’s part, he said, “The energy developments have … increased the risks of higher inflation further out if the energy crisis remains in place for a long period of time or gets worse.”
While Miran is focused on the current data, he still favors setting rates based on the outlook. He estimates that inflation will be running at the Fed’s 2% target about a year from now, and for that reason, given a softer job market, he is advocating cutting rates now.
Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.
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