(Reuters) -Federal Reserve Governor Stephen Miran on Wednesday repeated his view that data showing inflation running above 2% is backward-looking and should not be taken at face value, and again described U.S. monetary policy as too tight mainly because he believes cooling housing inflation is easing price pressures.
“To keep policy so tight in response to an artifact of the statistical measurement process rather than any actual supply-demand imbalances in the economy will then create the labor market weakness that we were tasked with avoiding,” Miran said during an event hosted by the University of Cambridge Judge Business School.
Inflation measures aren’t fully capturing current and expected declines in rents as demand drops amid President Donald Trump’s immigration crackdown, Miran argued. They are also elevated mechanically by stock market gains which should not be a driver of Fed policy, he said.
“It’s incumbent upon us to get monetary policy right, to get it out of such a restrictive state that would eliminate some of the downside risks to the economy.”
Miran, who is expected to return to his post as a top White House economic advisor when his term as a Fed governor ends in January, dissented at both of the U.S. central bank’s most recent rate-setting meetings, calling for half-percentage-point rate cuts instead of the quarter-percentage-point reductions the Fed delivered at both meetings.
Fed Chair Jerome Powell explained those rate cuts as insurance against further labor market slowing, and describes monetary policy now as modestly restrictive.
Miran’s self-described “out-of-consensus” view is that the Fed’s policy rate is much too tight.
Asked about his outlook for the economy, he pointed to the potentially stimulative effects of Trump administration policies like deregulation and tax policy, but said he did not have enough data to know where the economy stands now, a reference to the lack of official data during the U.S. government shutdown.
(Reporting by Ann Saphir; Editing by Franklin Paul and Paul Simao)
