As the market is preparing for the release of the Consumer Price Index (CPI) for November, Federal Reserve Governor Stephen Miran is coming out to challenge the prevailing view that inflation remains stubbornly above target.
His statement came just a few days before the release of CPI data on Thursday, and because this U.S. economic data could affect investor sentiment towards Bitcoin as well.
Stephen Miran: The Fed is addressing inflation incorrectly before the CPI is released.
Data on the CME FedWatch Tool shows that the market is reassessing interest rate bets, with traders predicting a 75.6% chance of no change at the Fed's January 2026 meeting.
At the same time, Miran argued that true core inflation is already moving close to the Fed's 2% target and stated that the remaining overshoot is mostly due to statistical distortions rather than excess demand.
Underlying inflation is already running very close to the Fed’s 2% target, Miran stated in a post on X, noting that much of the inflation above target is due to the peculiarities of the statistical measurement process, not excess demand.
The crux of Miran's argument is housing inflation, which is one of the most significant and persistent factors affecting core inflation measures.
He points out that the index favored by the Fed, Personal Consumption Expenditures (PCE), will reflect the rental costs of all tenants, meaning that this data will lag behind actual market rents that only adjust when lease agreements are renewed. According to Miran, this lag is distorting the current picture of inflation.
Additionally, Miran addressed inflation in the service sector excluding housing, specifically highlighting portfolio management fees as a key example. This policymaker argued that such fees lead to an inaccurately higher core PCE, even though long-term fees in the asset management industry tend to decrease.
Since this fee is measured from assets under management, a rise in the stock market may automatically inflate the measured prices, even if the actual costs to consumers are decreasing.
It would be inappropriate for us to chase these statistical distortions instead of focusing on actual consumer prices, Miran warned in his speech, suggesting that policy may risk being unnecessarily tight if responding to such distortions.
Review import tariffs and goods inflation as forward-looking data supports a decline in inflation.
Regarding capital goods inflation, Miran challenged the widespread belief that U.S. customs tariffs are a significant factor driving up prices of goods in recent times.
Referring to research on trade elasticity, he argued that exporters are the group most burdened by tariffs, impacting consumer prices relatively little and may only be temporary.
Even under conservative assumptions, he estimates that the impact on consumer prices is around two-tenths of a percent, which is mainly considered closer to noise than a permanent push on inflation.
Miran's views are supported by Anna Wong from Bloomberg Economics, who pointed to leading indicators showing a decline in inflation over the next six months.
Wong said that core goods in the CPI index are trending down again, likely to occur by mid-2026, adding that the market may be underestimating the scale of future interest rate cuts.
Wong wrote on X that the Fed could lower interest rates next year, arguing that if these signals persist, expectations for easing within 2026 would still be considered overly cautious.
As a result, both comments have made the internal Fed debate about tight monetary policy in response to inflation embedded since 2022, rather than the current situation, clearer.
When the CPI index is set to be announced on Thursday, this information is closely monitored to confirm or contradict Miran's claims that inflation is overstated and that policies may be too tight before entering 2026.
