Fed’s Miran says oil shock unlikely to alter rate outlook yet

• Key insight: Fed Gov. Stephen Miran said he is looking through the oil price shock and keeping his policy outlook unchanged, anticipating four 25 basis point cuts in 2026.
• Expert quote: “Looking 12 to 18 months out, there’s still not enough clarity to think that monetary policy itself should adjust in response to what’s happened.” — Fed Gov. Stephen Miran.
• Look ahead: As energy costs increased, some economists scaled back their expectations for further rate cuts this year.

WASHINGTON — Federal Reserve Gov. Stephen Miran said Monday it is too early to judge how U.S. involvement in a war with Iran will affect monetary policy.

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In an appearance on Bloomberg TV, Miran said policy should not be set by short-term headlines, highlighting that “it’s premature to have a clear view about what this is going to look like.”

“As you look 12 months out — and because of monetary policy lags, we really need to be looking a year to a year-and-a-half out — there’s just not enough information yet about what that looks like,” Miran said.

The Fed official noted that oil shocks in the past have affected headline inflation — which measures the total change in prices across the economy — but tend not to pass through to core inflation. For that reason, he said he is treating this oil shock as a one-time increase in prices rather than an ongoing inflationary pressure.

But Miran said there are two ways that an oil supply shock could translate into higher core inflation: if the public begins to expect inflation to rise beyond the first year and if wages begin to rise to keep up with inflation, a phenomenon known as a wage-price spiral.

“Looking 12 to 18 months out, there’s still not enough clarity to think that monetary policy itself should adjust in response to what’s happened,” he added.

Miran, who has dissented at all Federal Open Market Committee meetings since being confirmed to the board in September, said the labor market continues to need additional support.

“The labor market is continuing its gradual softening trend over the last three years,” he said. “I’ve seen nothing that would convince me the trend has stopped.”

He reiterated that his policy outlook, even with the Iran war, has not changed.

“Traditionally, you would look through an oil price shock like this, which means that my policy outlook from before is unchanged, and my policy outlook from before would be gradual cuts of interest rates,” Miran said. “I had about six cuts for the year in December. I reduced that to four cuts for the year in response to the inflation data between the two projection periods.”

Miran’s dovish monetary policy position contrasts with that of other Federal Open Market Committee members, who voted overwhelmingly in March to keep rates unchanged due to economic uncertainty.

The committee kept its target range for the federal funds rate at 3.5% to 3.75%, a decision that was widely expected as U.S. involvement in the war in Iran and uncertainty surrounding the Trump administration’s tariff policies cloud the outlook for monetary policy.

At its January meeting, officials also left rates unchanged as they sought greater clarity on the economic outlook after three consecutive quarter-point cuts at the end of last year aimed at supporting the labor market.

Fed Chair Jerome Powell reiterated the Federal Reserve’s commitment to bringing inflation back to its 2% target, saying rate cuts will depend on continued progress.

“We should see some progress on inflation,” Powell said during the post-FOMC press conference. “We should be seeing that. And the rate forecast is conditional on the performance of the economy. So if we don’t see that progress, then you won’t see the rate cut.”