Federal Reserve's Miran says there is 'significant disinflation in the pipeline' despite rise in CPI

Economic Context - The September jobs report is missing due to the government shutdown, leaving policymakers without crucial economic data as the Federal Reserve considers its next interest rate move [1][2] - The Federal Reserve relies on economic data to set monetary policy, making the absence of key reports like retail sales and inflation data problematic for decision-making [3][4] Fiscal Policy and Economic Indicators - The fiscal deficit has decreased by approximately $400 billion on an annualized basis from February to August compared to the previous fiscal year, indicating a significant policy shift [6] - Population growth has experienced substantial fluctuations, impacting the neutral interest rate and making current monetary policy more restrictive [7][8] Interest Rate Decisions - The neutral rate is estimated to be around 0.5% in real terms, suggesting that the Federal Reserve should move towards this rate more quickly due to recent tightening of policy [8][9] - Concerns are raised about the risks of an economic slowdown if interest rates remain too tight for an extended period [9] Inflation Dynamics - Current inflation data shows significant increases in food prices and other essentials, complicating the justification for cutting interest rates [19][20] - Shelter costs, which are a major component of inflation, are expected to see disinflation due to a lag in average rent adjustments compared to market rents [22][23] Policy Criticism and Responses - Criticism from economists like Larry Summers highlights concerns about the potential inflationary impact of current policies, with a call for more cautious approaches [26][28] - The Federal Reserve's recent rate cuts have not adversely affected the bond market, indicating a different economic landscape compared to previous years [17]