Stephen Miran

Now that the election is over, Congress should get to work immediately to pass the bipartisan permitting reform bill. If we are to reindustrialize our nation and maintain technological supremacy, we must expand our infrastructure, especially energy. Now is the window.

The UK needs a serious supply side reform agenda and a new growth model for prospering outside of the EU. PM Truss is, to date, the only UK leader who put forth an agenda to make the UK an attractive place to do business and spur it back to growth. It's unfortunate for the UK that she was prevented from implementing her project, and UK leaders today should pick up its pieces. I'm looking forward to reading the full account of an economic vision Britain still sorely needs

I argued on CNBC this morning that:

1. The data have been consistent with not hiking rates. Core CPI came in at the lowest level since March 2021, and core PCE is about to be revised and brought closer in line with the less error-prone CPI levels. We are getting the evidence we need that the spring was consistent with a one-off energy shock, as core PCE moving averages slope down and come in line with a forecast to be back at target in the period after monetary policy lags, i.e. in about a year. We know from Trichet that hiking into an oil shock doesn't lead to the best outcomes.

2. If you held in June and July and become more hawkish as the inflation data come down, it speaks to an incoherent reaction function. The market needs to believe there is an economic framework underlying monetary policy decisions and they are not being made randomly. Typically, a central bank becomes more dovish as inflation data and forecasts come down, not more hawkish. If the Fed hikes, when the dust settles, I think this will speak to a larger credibility problem as the reaction function will appear closer to randomness than to a mapping from inflation data to policy outcomes. This would entail the need to specify why hiking was consistent with declining inflation data in an economically coherent framework, which to date has not been done.

3. The oft-repeated argument that the Fed needs to hike "to control the long end" is problematic. The premise is invalid: with term premia and inflation expectations well behaved, the move higher in long yields has been a result of improved growth expectations, i.e. a good increase in yields rather than a bad increase in yields, and not one that needs to be fought (other than in the sense of smoothing volatility as Treasury is doing through buyback liquidity). Moreover, even if one views "controlling the long end" as a valid goal for monetary policy, hiking in this environment will be counterproductive as a) an increase in short-term funding costs is only going to be passed through and raise long yields given the shifting buyer base for Treasurys; b) history doesn't really show that long yields come down with Fed hikes; and c) the incoherence of the reaction function will, when the dust settles and after initial reactions, lead to higher and not lower risk premia.

4. What, then, is the argument for hiking? Atmospherics. Market pricing and not wanting to cause additional volatility given market pricing. With well-anchored inflation expectations and the inflation data on the right path, credibility isn't really at risk here.

The argument "inflation has been high for x months" is backward-looking. Given monetary policy lags, policy has to be set for Q4 of 2027 and Q1 of 2028. Setting policy based on what happened in 2023 or 2024 or even 2026 is the type of thing Milton Friedman's "fool in the shower" would do.

"Neutral rates went up, then they came back down" was the major theme of my Sept 2025 speech which attracted a lot of criticism but was, in the end, correct.

There's a lot more uncertainty over levels than directions. Recently I'd edge my estimate up a tad over AI borrowing.

Core CPI next week is expected to be 2.5%. At historic norms, PCE would be ~2.1%. The inverted relationship is largely measurement error (PM services, software).

The jobs data show what I feared: we should not ask people to lose their jobs to offset inflation measurement error.