As the markets prepare for the release of the November consumer price index (CPI), Federal Reserve Governor Stephen Miran goes against the prevailing notion that inflation remains stubbornly above target.
Hans statements come just a few days before the release of the CPI figures on Thursday. These American key figures are likely to affect investor sentiment for Bitcoin.
Stephen Miran: Fed is combating the wrong inflation before CPI
Data from the CME FedWatch Tool shows that the markets are reassessing their interest rate expectations, with traders estimating a 75.6% probability of no change in the rate at the Fed meeting in January 2026.
This is happening at the same time as Miran claims that underlying inflation is already close to the Fed's 2% target. He believes that much of the remaining overshoot is due to statistical distortions and not excessive demand.
“Underlying inflation is already very close to the Fed's 2% target,” said Miran in a post on X. “The bulk of the inflation overshoot is due to peculiarities in the statistical measurement process, not excessive demand.”
The core of Miran's argument is housing-related inflation. This is one of the largest and most persistent contributors to core inflation.
He pointed out that the Fed's preferred Personal Consumption Expenditures (PCE) index captures housing costs for all tenants, which implies that it lags behind the market's actual rent levels, as only new contracts are included in the ongoing timeframe. According to Miran, this gives a distorted picture of inflation now.
Miran also addressed core inflation outside of housing, pointing to portfolio management fees as a key example. The policymaker believes these create artificially high PCE despite a long-term trend of lower fees in asset management.
Since fees are measured based on assets under management, a rising stock market can mechanically lead to higher measured prices. This can happen even if the actual costs for consumers are on the way down.
“It would be unwise for us to chase statistical peculiarities instead of focusing on actual consumer prices,” Miran warned in his speech, suggesting that monetary policy could become too tight if one reacts to such distortions.
New assessment of tariff rates and goods inflation as forward-looking data supports disinflation.
Regarding goods inflation, Miran challenged the widespread belief that American tariffs are a significant driver behind recent price increases.
Through research on trade elasticity, he argues that exporters bear the brunt of the tariffs. This leads to a relatively small and likely temporary effect on consumer prices.
Even with conservative assumptions, he estimated the effect on consumer prices to be around two-tenths of a percentage point. Ideally, this is closer to noise than a lasting inflation impulse.
Miran's view is also shared by Anna Wong from Bloomberg Economics, who points to leading indicators suggesting renewed declines in inflation over the next six months.
Wong said that the core CPI for goods is falling again, likely towards mid-2026, and added that markets may be underpricing the extent of future rate cuts.
“The Fed may cut rates next year,” Wong wrote on X, arguing that if these signals persist, expectations for easing in 2026 are conservative.
The statements sharpen the debate within the Fed about whether monetary policy is still fighting against inflationary pressures from 2022 rather than current conditions.
With CPI figures on Thursday, the numbers will be closely monitored to either confirm or refute Miran's claim that inflation is inflated, and that monetary policy may already be tighter than necessary heading into 2026.
