Fed Governor Stephen Miran said overnight that the neutral rate of interest has likely declined relative to a year ago, making current policy settings “more restrictive than a couple quarters ago.”
Speaking at a conference, Miran warned that such “additional tightness” could pose risks ahead, as the lagged effects of monetary policy start to feed through the economy. While he remained upbeat about near-term conditions, he cautioned that if policy isn’t adjusted appropriately, “I do see some risks lurking there.”
He also highlighted the challenge of the ongoing U.S. government shutdown, which has deprived policymakers of critical economic data. Miran noted that private-sector indicators are not a “sufficient replacement” and expressed hope that the government will reopen before the October 28–29 FOMC meeting, allowing the Fed to make a data-informed decision.
Meanwhile, Minneapolis Fed President Neel Kashkari voiced concern that incoming data show stagflationary signals, with a slowing labor market and inflation still near 3%. He said the key uncertainty lies in whether tariff-induced price pressures will fade quickly or prove persistent, adding that it is “too soon to reach a firm conclusion.”
