Former Fed Gov. Stephen Miran: Inflation is much more likely to be transitory this time

Summary

Stephen Miran explains that modern measures of money supply, weighted by transactional use, indicate monetary policy is currently neutral. He argues this means recent elevated inflation is likely transitory, unlike the persistent post-pandemic inflation that these measures would have predicted. He concludes the Fed should hold rates steady and not hike, citing measurement distortions in PCE inflation and anchored inflation expectations.

• Improved money supply measures weight transaction-focused money, fixing past predictive failures.
• Post-pandemic, these measures would have signaled strong, persistent inflation early on.
• Currently, the weighted money supply indicates monetary policy is neutral.
• Recent higher inflation is likely transitory and not driven by monetary or fiscal policy.
• The Fed should hold rates steady; a negative core CPI print does not justify a hike.
• Long-term inflation expectations remain well-anchored, preserving Fed credibility.
• The unusual gap between CPI and PCE is largely due to measurement error, not real inflation pressure.
• Miran briefly suggests that some tariffs may be economically beneficial, but the discussion was cut short.