Key Takeaways:
Stephen Miran, who served on the Federal Reserve Board until 2025, told CNBC on Tuesday that the current inflation cycle is "much more likely to be transitory" than the 2021-2023 surge, a view that runs counter to growing market expectations for tighter policy.
Former Federal Reserve Governor Stephen Miran said the current inflation wave is "much more likely to be transitory," pushing back against mounting speculation that the central bank will need to raise rates as early as autumn.
"The composition of this inflation is different from what we saw in 2021-2023 — it's much more likely to be transitory," Miran, now senior strategist at Hudson Bay Capital, said on CNBC's "Squawk Box."
His remarks come as the Federal Open Market Committee begins a two-day meeting Tuesday, with the fed funds rate at 3.75% — unchanged since December 2025. Durable goods orders rose just 0.3% in June, well below the 1.6% consensus, while Brent crude slid 8.7% to $88.36 a barrel on easing geopolitical tensions, providing a tailwind to the Fed's inflation fight.
If Miran's view proves correct, the Fed could maintain its current stance through year-end, a scenario that would support bond prices and risk assets while weighing on the dollar. If the committee disagrees, Wednesday's statement and press conference could lay groundwork for a September hike — the first tightening since rates were cut to 3.75% in December.
The FOMC is widely expected to hold rates steady when it announces its decision Wednesday at 2 p.m. in Washington. But the focus will be on Chair Jerome Powell's press conference and the statement's forward guidance, with markets parsing every word for clues about the autumn path.
Miran's transitory thesis rests on several factors. The recent plunge in oil prices — Brent crude has fallen more than 15% from its June peak above $104 — is easing input costs across manufacturing and transportation. The Dallas Fed's general business activity index, which improved to 1.3 in July from zero, suggests the industrial drag may be bottoming without reigniting price pressures.
The Rate Path Debate
Overnight index swaps currently price roughly a 35 percent probability of a hike by the September meeting, according to data compiled by Bloomberg. That is down from nearly 50 percent in early July, before oil's sharp decline. A hold in September would leave the next decision to the November meeting, just days after the U.S. midterm elections.
The last time a former Fed governor publicly challenged the hawkish consensus on the eve of a meeting was in March 2024, when dissenting voices preceded a surprise hold that sent the S&P 500 up 1.5 percent in a single session. The parallel is not exact — Miran left the board in 2025 and no longer votes — but his track record carries weight among rate traders who remember his early calls on supply-chain inflation in 2021.
This article is for informational purposes only and does not constitute investment advice.
