Market participants are on edge ahead of the November Consumer Price Index (CPI) release. Federal Reserve Board member Steven Miran is challenging the prevailing view that inflation remains consistently above target.

Miran's remarks came just a few days before the CPI data release. This U.S. economic indicator is expected to impact Bitcoin investors' sentiment.

Steven Miran, Fed's flawed inflation response... ahead of CPI

According to the Chicago Mercantile Exchange (CME) FedWatch tool, the market is recalibrating its expectations for the benchmark interest rate. Traders anticipate a 75.6% chance of a rate freeze at the Federal Open Market Committee (FOMC) meeting in January 2026.

Director Miran asserts that core inflation is already very close to the Fed's 2% target. He states that most of the remaining excess inflation arises not from excess demand but from statistical distortions.

"Core inflation is already very close to the Fed's 2% target," Director Miran said in a post on X (formerly Twitter). "Most of the inflation exceeding the target is due to statistical anomalies in the measurement process, not excess demand."

Director Miran's argument centers on housing cost inflation. Housing costs are one of the largest and most persistent contributing factors in core inflation indicators.

He pointed out that the Fed's preferred Personal Consumption Expenditures (PCE) index captures the housing costs of all tenants. This is only reflected during lease renewals, leading to a delay compared to real-time market rents. Director Miran explained that this delay distorts the current inflation figures.

Director Miran also mentioned inflation in the non-residential services sector, citing investment portfolio management fees as a key example. As a policymaker, he argues that despite the long-term decline in fees in the asset management industry, these fees artificially inflate core PCE.

These fees are measured on an asset-under-management basis, so when the stock market rises, the measured price can mechanically increase. This can also happen when the actual consumer burden decreases.

"Focusing on statistical anomalies instead of actual consumer prices is foolish," Director Miran warned in his speech. He stated that if policies respond to such distortions, there is a risk of being overly restrictive.

Review of tariffs and commodity inflation... Leading indicators support disinflation.

Regarding commodity inflation, Director Miran refuted the common view that U.S. tariffs are the main cause of the recent price increases.

Based on research on trade elasticity, he analyzed that exporters bear most of the tariff burden. Consequently, he stated that the impact on consumer prices is limited and temporary.

Even under the most conservative assumptions, he estimated that the impact on consumer prices is about 0.2 percentage points. Ideally, he says it is closer to noise than to an inflation shock.

Director Miran's views are also supported by Anna Wong of Bloomberg Economics. She noted that disinflation signals are being captured again over the next six months.

Wong noted that the goods sector within core CPI is showing a downward trend again. He mentioned that there could be an inflection point around mid-2026, adding that the market is underestimating the extent of rate cuts.

"The Fed may be able to lower rates next year," Wong wrote on X. He argued that if these signals persist, the expectations for easing in 2026 are still too conservative.

Thus, within the Fed, there is a deepening debate about whether the focus of policy response should be on the inflation that occurred in 2022 or the current situation.

The CPI announcement is scheduled for Thursday. This data is expected to provide confirmation or opposition to Director Miran's claim that "inflation is being overstated, and policy is already sufficiently tight."