Fed's Stephen Miran Sees Neutral ‘Quite a Ways Below' Current Policy

Core Viewpoint - The Federal Reserve's current monetary policy is considered too restrictive, with a neutral rate that is believed to be significantly lower than the current policy stance [1][2][14]. Group 1: Monetary Policy and Economic Outlook - The argument for maintaining a less restrictive policy is based on a more optimistic view of inflation compared to other committee members, suggesting that prolonged restrictive policies could lead to an economic downturn [2][16]. - The concept of "passive tightening" is introduced, indicating that as neutral rates shift, the existing policy can become tighter without any active changes [14][15]. - The discussion highlights that financial market conditions may appear easier, but this does not necessarily reflect the true stance of monetary policy, as various factors influence market dynamics [4][7][8]. Group 2: Financial Conditions and Market Dynamics - Financial conditions affecting housing and private credit markets are noted to be tighter, contrasting with the perception of easier conditions in stock markets [8][31]. - The impact of alternative data on the labor market is acknowledged, suggesting that it indicates a decline in demand, which aligns with the view that current policy is too tight [28][30]. - Concerns are raised about the potential for unrecognized distress in private markets, which could signal broader issues related to the restrictive stance of monetary policy [31][33].