Federal Reserve Governor Stephen Miran — who has dissented in favor of rate cuts at every meeting since his appointment by President Donald Trump last year — said Monday that the Iran-driven oil shock does not alter his policy outlook, arguing the Fed should wait for clearer evidence before assessing the inflation impact of higher energy prices.
“I think that we shouldn’t be making policy based on short-term headlines,” Miran said Monday during a Bloomberg interview.
“It’s just still premature to have a clear view about what this is going to look like as you look 12 months out.”
Should The Fed Look Through An Oil Shock?
Since the start of the war in Iran, oil prices — as tracked by the United States Oil Fund (NYSE:USO) — have rallied nearly 40%, fueling fears of an upcoming inflationary wave.
“These oil shocks have been things that this Fed has looked through for a long time,” Miran said.
“It would be highly unusual for the Fed to start looking through them now.”
Traditional central banking holds that oil shocks hit headline inflation hard but pass through to core inflation only weakly, and that central banks should look through the first-round effects unless two specific conditions emerge: inflation expectations beyond the first year start to rise, or wages begin responding to higher energy prices in a way that creates a self-reinforcing spiral.
Miran said he sees neither.
But financial markets are sending a different signal. Prediction markets now put a 34% probability on zero Fed rate cuts in 2026 — …
