Key Takeaways
- Oil price increases have minimal long-term inflationary effects, with most inflation happening upfront.
- Current economic conditions do not necessitate aggressive monetary policy interventions.
- Forward inflation expectations remain stable despite recent oil price movements.
- Monetary policy should be set with a long-term perspective due to delayed effects on the economy.
- Inflation is not overly problematic when adjusted for measurement quirks.
- Negative supply shocks, like rising oil prices, do not have a long-term impact on inflation expectations.
- The labor market is gradually cooling, reducing the likelihood of a wage-price spiral.
- Deregulation is expected to reduce inflation by about half a percent annually for the next few years.
- Both Federal Reserve and independent research suggest a persistent disinflationary effect from deregulation.
- Short-term oil shocks should not prompt immediate monetary policy responses.
- Inflation projections have been slightly increased due to the oil shock, but long-term policy should remain steady.
- The relationship between oil prices and inflation expectations is complex but manageable.
- The current economic environment does not warrant a rapid policy shift.
Guest intro
Stephen Miran is a member of the Board of Governors of the Federal Reserve System, where he was sworn in on September 16, 2025. Previously, he served as Chairman of the Council of Economic Advisers under President Donald Trump, where he was confirmed by the Senate in March 2025 after authoring influential policy papers on tariffs and trade. During the COVID-19 pandemic, Miran served as senior adviser for economic policy at the US Department of the Treasury, where he helped shape the CARES Act and other stimulus measures totaling over 2 trillion dollars.
The impact of oil prices on inflation
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Oil moving higher now has very little inflationary consequence twelve to eighteen months out; all the inflation happens upfront.
— Stephen Miran
- Oil price increases are primarily an immediate inflationary concern, not a long-term one.
- Forward inflation expectations are largely unaffected by recent oil price movements.
-
Forward inflation expectations a year out, two years out, three years out are all pretty much unaffected by what’s been going on.
— Stephen Miran
- Short-term oil shocks should not prompt immediate monetary policy responses.
-
I did raise my inflation projection for my headline inflation projection for this year to 2.7% right so I moved it a little bit higher because of the oil shock.
— Stephen Miran
- The relationship between oil prices and inflation expectations is complex but manageable.
- Oil shocks have a limited impact on long-term inflation forecasts.
Monetary policy and its timing
- Monetary policy must be set with a long-term perspective due to the delayed effects on the economy.
-
We have to make policy for twelve to eighteen months from now because there are big lags with which monetary policy hits the economy.
— Stephen Miran
- Current economic conditions do not necessitate aggressive monetary policy interventions.
-
I don’t think the economy needs monetary policy to be slamming on the gas and accelerating the economy like it was in 2021 or 2022.
— Stephen Miran
- The timing of monetary policy adjustments is critical for effective economic forecasting.
- Long-term policy should remain steady despite short-term shocks.
- The current economic environment does not warrant a rapid policy shift.
- Understanding the time lag between policy adjustments and economic impact is essential.
Inflation expectations and economic signals
- Forward inflation expectations remain stable despite recent oil price movements.
-
Forward inflation expectations a year out, two years out, three years out are all pretty much unaffected by what’s been going on.
— Stephen Miran
- Inflation is not overly problematic when adjusted for measurement quirks.
-
I do not view inflation as being overly problematic whereas the labor market has been on a very gradual trend of weakening over the course of the last three years.
— Stephen Miran
- Negative supply shocks, like rising oil prices, do not have a long-term impact on inflation expectations.
-
If you look at the inflation swap market, you see that forward inflation expectations a year out, two years out, three years out are all pretty much unaffected by what’s been going on.
— Stephen Miran
- The labor market is gradually cooling, reducing the likelihood of a wage-price spiral.
- Understanding how inflation expectations are formed is crucial for economic analysis.
The role of deregulation in inflation dynamics
- Deregulation is expected to reduce inflation by about half a percent annually for the next few years.
-
I calculated that the deregulatory wave that’s been hitting the economy over the last fifteen months or so would ultimately drag on inflation by about half a percent a year for the next few years.
— Stephen Miran
- Both Federal Reserve and independent research suggest a persistent disinflationary effect from deregulation.
-
When you apply their results to the scope of the deregulatory shock that we’ve seen over the last fifteen months or so it implies a roughly 0.3% drag on inflation each year for the next few years.
— Stephen Miran
- The impact of deregulation on inflation is significant for policymakers.
- Deregulation contributes to a more stable inflationary environment.
- Understanding the impact of deregulation is essential for economic forecasting.
- Deregulation effects are consistent across different research findings.
Labor market dynamics and their implications
- The labor market is gradually cooling, reducing the likelihood of a wage-price spiral.
-
With the labor market very gradually cooling and declining wage pressures you just are not going to get a wage price spiral.
— Stephen Miran
- Wage-price dynamics are a critical factor influencing monetary policy decisions.
- Monitoring labor market trends is essential for economic stability.
- The gradual cooling of the labor market supports a steady monetary policy approach.
- Labor market dynamics have significant implications for inflation and economic growth.
- Understanding wage-price dynamics is crucial for effective policy making.
- The labor market’s gradual cooling aligns with broader economic trends.
Short-term vs. long-term economic impacts
- Short-term oil shocks should not prompt immediate monetary policy responses.
-
This is not the type of thing that policy should respond to because that happens all upfront.
— Stephen Miran
- Long-term policy should remain steady despite short-term shocks.
- The relationship between oil prices and inflation expectations is complex but manageable.
- Short-term economic impacts require careful consideration in policy making.
- Understanding the distinction between short-term and long-term impacts is crucial.
- Effective policy making requires a focus on long-term economic stability.
- Short-term shocks should not dictate long-term policy directions.
Inflation projections and policy responses
- Inflation projections have been slightly increased due to the oil shock.
-
I did raise my inflation projection for my headline inflation projection for this year to 2.7% right so I moved it a little bit higher because of the oil shock.
— Stephen Miran
- Short-term oil shocks should not prompt immediate monetary policy responses.
- Long-term policy should remain steady despite short-term shocks.
- Understanding the relationship between oil shocks and inflation projections is essential.
- Inflation projections are influenced by a variety of economic factors.
- Effective policy responses require a comprehensive understanding of inflation dynamics.
- Inflation projections provide valuable insights for economic forecasting.
The broader economic environment
- Current economic conditions do not necessitate aggressive monetary policy interventions.
-
I don’t think the economy needs monetary policy to be slamming on the gas and accelerating the economy like it was in 2021 or 2022.
— Stephen Miran
- The current economic environment does not warrant a rapid policy shift.
- Understanding the broader economic environment is crucial for effective policy making.
- The relationship between economic conditions and policy decisions is complex.
- Monitoring the broader economic environment is essential for stability.
- The current economic environment supports a steady policy approach.
- Effective policy making requires a comprehensive understanding of the economic landscape.
