As markets prepare for the release of the Consumer Price Index (CPI) for November, Federal Reserve Governor Stephen Miran opposes the widespread opinion that inflation remains stubbornly above the set target.
His statements come just a few days before the release of the CPI data, scheduled for Thursday. This economic data from the United States could influence investor sentiment on Bitcoin.
Stephen Miran: The Fed is fighting the wrong inflation ahead of the CPI.
The CME FedWatch Tool data shows that markets are reconsidering their bets on interest rates, with traders attributing a 75.6% probability of no change in the Fed's January 2026 meeting.
These analyses come as Miran argues that core inflation is already very close to the Fed's 2% target. According to Miran, the remaining part of the excess would be due to statistical distortions and not to excessive demand.
Core inflation is already very close to the Fed's 2% target,” Miran said in a post on X. “Most of the inflation in excess of the target is due to peculiarities of statistical measurement processes, not from excessive demand.
At the heart of Miran's argument is inflation related to housing, one of the largest and most persistent factors in core inflation data.
It has been observed that the PCE (Personal Consumption Expenditures) index, favored by the Fed, takes into account housing costs for all tenants. This means that the index is lagging behind real rental prices, which are updated only upon contract renewal. According to Miran, this lag is now distorting the true picture of inflation.
Miran also addressed the issue of inflation related to services, excluding the housing sector, highlighting for example portfolio management fees. The policymaker argues that these items artificially inflate the core PCE despite a gradual reduction in fees in the managed savings sector.
Since these fees are calculated based on managed assets, a rise in equity markets can automatically increase measured prices. This can happen even when actual costs for consumers are decreasing.
It would be wrong to chase statistical distortions instead of focusing on actual consumer prices,” Miran warned in his speech, suggesting that policy could become excessively restrictive if it reacts to such distortions.
Rethinking tariffs and inflation of goods while forecast data supports disinflation
Regarding goods inflation, Miran disputed the widespread belief that U.S. tariffs are the main driver of recent price increases.
Citing research on trade elasticity, Miran argues that most of the burden of tariffs falls on exporters. The impact on consumer prices thus remains limited and likely temporary.
Even adopting the most conservative assumptions, he estimated that the effect on consumer prices is around two-tenths of a percentage point. Ideally, therefore, this effect is more at the level of "background noise" than as a real lasting inflationary impulse.
Miran's viewpoint is also shared by Anna Wong of Bloomberg Economics, who points out some forward-looking indicators suggesting a new phase of disinflation in the next six months.
Wong states that the goods component of core CPI is again oriented downward, potentially by mid-2026, adding that markets may underestimate the extent of rate cuts later on.
The Fed can cut next year,” Wong wrote on X, arguing that if these signals were to find confirmation, expectations for monetary easing in 2026 would remain too conservative.
Overall, these comments make the discussion within the Fed more heated on a crucial point: are decision-makers still battling inflationary pressures originating in 2022, or are they already facing different current conditions?
With the CPI coming out on Thursday, the data will be closely monitored to find confirmation or refutation of Miran's statement that inflation is overstated and that monetary policy is already perhaps too restrictive looking ahead to 2026.
