Miran Says Data Should Push Fed in 'Dovish Direction'

Core Viewpoint - The discussion highlights concerns regarding inflation rates, suggesting that the perceived inflation excess is largely a statistical mirage rather than a reflection of real supply-demand imbalances in the economy [1][5]. Inflation Analysis - Current inflation is reported to be around 3%, but the argument is made that this figure does not accurately represent the underlying economic conditions [1]. - Market rents have been stable at approximately 1% for a couple of years, indicating that the measured inflation is artificially high due to the lag in statistical convergence [2][3]. - The supply-demand imbalance that existed from 2020 to 2023 should not dictate current monetary policy, as it does not reflect the present economic landscape [3]. Monetary Policy Considerations - Monetary policy operates with significant lags, necessitating that decisions be based on forecasts rather than past data [6][7]. - The lack of recent data does not invalidate existing forecasts; rather, it provides opportunities to reassess them [8]. - Recent data trends indicate weaker inflation and higher unemployment than previously expected, suggesting a potential shift towards a more dovish monetary stance [9]. Data Dependence vs. Forecast Dependence - There is a debate on the relevance of meeting schedules in relation to data availability, with a suggestion that being excessively data-dependent may lead to backward-looking policies [12][13]. - The emphasis should be on forecast dependence to ensure that monetary policy aligns with future economic conditions rather than past data [13]. Interest Rate Decisions - There is a willingness to support a 25 basis point cut if it aligns with the broader economic needs, emphasizing the importance of not causing harm to the economy for the sake of maintaining a certain policy stance [14][15].