Fed's Miran Says It's Appropriate to Keep Cutting Rates
Speakers
Summary
- Fed Policy Path: Miran argues the Fed must continue cutting rates by 25bps increments. He views the current policy as still restrictive and believes the labor market has been weakening for two years, necessitating accommodation.
- Geopolitical/Oil Shock: Despite the "shock over the weekend" in the Middle East and rising oil prices, Miran believes the pass-through to core inflation is limited. He explicitly differentiates the current environment from 2022, noting that fiscal and monetary policies are no longer expansionary, meaning the Fed should not halt cuts due to a supply-side oil shock.
- Private Credit Divergence: A key contrarian insight is that "financial conditions" indices are misleadingly loose because they fail to capture the tightening and stress occurring in Private Credit markets.
- AI & Labor: Miran views recent massive tech layoffs (50% of staff in one case) not as a recessionary signal, but as a classic productivity shock where AI allows firms to "produce more with fewer cuts," ultimately bullish for margins.
Trade Ideas
Steven Miran
Chair, Council of Economic Advisers
Miran states, "My forecast for inflation calls for continuing interest rate cuts... I prefer to still move at 25 clips." He explicitly rejects the idea of pausing due to the recent oil shock, noting, "It's difficult to get excited about a policy implication [from oil]... pass through into core inflation... is quite limited." The market fears the Fed might pause cuts due to Middle East energy inflation. Miran argues the Fed will look through this "headline shock" because the macro backdrop (restrictive policy) is different from 2022. If the Fed continues cutting 25bps despite oil rising, yields at the long end (which price in growth/inflation) might wobble, but the policy-sensitive rates will drop, supporting bond prices. Long Duration Treasuries as the Fed commits to the cutting cycle regardless of supply-side noise. A sustained, massive spike in oil that unanchors long-term inflation expectations (which Miran admits would change his mind).
Steven Miran
Chair, Council of Economic Advisers
Miran highlights a "potential shortcoming" in market analysis: "Financial conditions aren't showing you what's going on in private credit... we decide not to look at the part of financial markets that are tight." He references "credit jitters." Investors currently believe liquidity is abundant (loose conditions). Miran suggests a hidden divergence: Private Credit (PC) is actually "tight" (stressed/illiquid). If PC is the engine of recent credit growth and it is seizing up, Business Development Companies (BDCs) and private lenders may face rising non-accruals or liquidity crunches that public equity markets haven't priced in yet. Avoid or Watch major BDCs (proxies for private credit health) for signs of credit deterioration that isn't showing up in high-yield bond spreads. If the "soft landing" is perfect, private borrowers may refinance into public markets, alleviating the stress on private lenders.
Steven Miran
Chair, Council of Economic Advisers
Addressing a tech company cutting half its staff, Miran says, "This is how productivity gains and technology work... they allow you to produce more with fewer cuts." He dismisses this as a labor crisis and frames it as "technological progress." This validates the "AI Efficiency" bull case. If companies can maintain or grow revenue while slashing headcount by 50% via AI, operating margins will expand significantly. The primary beneficiaries are the hyperscalers providing the infrastructure (Microsoft, Google, Meta) and the firms successfully executing these cuts. Long Big Tech / Hyperscalers as the drivers of this deflationary productivity boom. Regulatory backlash against mass AI-induced layoffs or a collapse in consumer demand due to rising unemployment.
Up Next
This Bloomberg Markets video, published March 04, 2026, features Steven Miran discussing TLT, IEF, ARCC, OBDC, FSK, MSFT, GOOGL, META. 3 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Steven Miran · Tickers: TLT, IEF, ARCC, OBDC, FSK, MSFT, GOOGL, META