Bloomberg Talks: Federal Reserve Governor Stephen Myron Talks Fed Decision

Date: November 3, 2025
Host: Bloomberg | Guest: Fed Governor Stephen Myron

Episode Overview

This episode features an in-depth interview with Federal Reserve Governor Stephen Myron, following a pivotal FOMC meeting. Myron dives into his unique perspective on monetary policy, dissenting voices within the committee, and the effects of “passive tightening.” Discussion spans the nuances of judging financial conditions, the reliability of economic data mid-shutdown, and the revealed weaknesses in private credit markets. Myron’s candid arguments about the risks of remaining too restrictive on policy provide rare insight into current central bank debates.

Key Discussion Points and Insights

Myron’s Approach to Policy and the Neutral Rate

• Main Position: Myron argues current Fed policy is too restrictive, advocating for swifter rate cuts.
  • “I think neutral is quite a ways below where current policy is... given my rather more sanguine outlook on inflation than some of the other members... The longer you keep policy restrictive, the more you run the risk that monetary policy itself causes a downturn in the economy.” (00:41)
• He criticizes automatic reliance on market indicators like stock prices and credit spreads, noting:
  • “Financial markets are driven by a lot of things, not just monetary policy... AI or a new technology... could push financial markets higher, which would look like an easing of financial conditions. But that doesn’t necessarily tell you anything about the stance of monetary policy.” (01:24)
  • Emphasizes housing-related conditions and segments of private credit as tighter and more economically important than equities. (01:24–02:52)

The Argument for “Passive Tightening”

• Myron’s unique assertion: Policy has passively tightened through 2025—even though the Fed hasn’t raised rates recently.
  • “What matters for the stance of policy is where you are relative to the new neutral rate... if you stay where you are and the neutral goes down, you’ve passively tightened.” (03:06)
  • Explains this is driven by dramatic swings in the population growth rate over just a few years and changing fiscal dynamics.
  • “We experienced the last few years, 30 years worth of population growth change in only three years... the neutral rate itself would change more rapidly over time as well.” (03:06–04:58)

Debating the Magnitude and Pace of Cuts

• Responding to questions about his dissent in favor of a 50 basis point cut (instead of 25), Myron clarifies:
  • “I don't think the economy is dysfunctional right now... If I did, then... I would have no problem voting for bigger cuts... getting there in 50s instead of 25 is fine.” (05:11)
• Asked if he’d dissent again:
  • “I don't want to commit to that because a lot can happen... but if things play out according to my forecast, then yes, I would.” (05:48)

Fed Internal Dynamics & Data in Uncertain Times

• Addressing divisions within the committee, Myron says each governor is guided by personal analysis—not as a reaction to others’ positions. (06:12)
• Warns about the risks of overreliance on backward-looking data—especially challenging during a government data blackout:
  • “Being excessively data dependent makes you backward looking... monetary policy takes lags to hit the economy. You want to be forward looking, so you want to make policy based on your forecast.” (06:40)
• On alternative data:
  • Finds it “not super useful” for inflation, more helpful for assessing labor market trends—which support his dovishness. (06:40)

Private Credit Market Stress

• Highlights the potential masking of financial distress due to lack of timely data ("marks") in private markets:
  • “There's a chance that because we don't get much marks on these things very frequently that distresses are actually greater than we thought they were.” (08:47)
• While Myron mostly agrees with the systemic-risk-is-modest view, he cautions:
  • “When you have a series of seemingly uncorrelated, unsystematic issues... it can be an indication that monetary policy is restrictive.” (09:48)
• Suggests a possible build-up in problems not captured by broader indices.

Notable Quotes & Memorable Moments

• On the risk of over-relying on financial markets:
  “It’s a mistake to look at financial conditions and sort of conclude something automatically about the stance of monetary policy.” — Stephen Myron (01:24)

• On the speed of change in the neutral rate:
  “We experienced the last few years, 30 years worth of population growth change in only three years.” — Stephen Myron (03:44)

• On policymaking amid data gaps:
  “You want to be forward looking, so you want to make policy based on your forecast. Now there are times when you might not have a lot of confidence in your forecast and so you need to be data dependent, but you should be data dependent only to the extent you don’t have confidence in your forecast.” — Stephen Myron (06:40)

• On hidden risks in private credit:
  “Because we don’t get much marks on these things very frequently, distresses are actually greater than we thought they were.” — Stephen Myron (08:47)

• On isolated credit events as a warning sign:
  “When you have a series of seemingly uncorrelated... credit problems that had been masked for a while and then suddenly come to light, it tells you something about the stance of monetary policy.” — Stephen Myron (09:48)

Timestamps for Key Segments

• Approach to Last Week’s FOMC Meeting & Restrictiveness – 00:34–01:03
• Nuances of Financial Conditions and Market Indicators – 01:24–02:52
• Passive Tightening and Neutral Rate Discussion – 03:06–04:58
• Why Not Dissent for a Bigger Cut? – 05:11–05:41
• Possibility of Future Dissents – 05:41–06:04
• Fed Committee Dynamics and Individual Analyses – 06:12–06:31
• Difficulties of Data Collection During Shutdown – 06:40–08:36
• Private Credit Risks & Monetary Policy – 08:36–09:48

Tone and Language

Throughout the episode, Governor Myron maintains a direct, analytical, and occasionally cautionary tone, candidly outlining both his technical rationale and the institutional challenges facing the Fed. The interviewers’ questions are sharp and respectful, seeking to clarify distinctions both within the FOMC and regarding broader financial stability themes.

Summary Takeaways

• Governor Myron is a leading voice for faster monetary policy easing, arguing current conditions are unduly tight by multiple measures.
• He urges greater nuance in interpreting financial conditions, especially cautioning against equating stock market strength with easy money.
• Myron advances the under-discussed idea of "passive tightening" via a falling neutral rate, partly due to dramatic demographic changes.
• The episode highlights concerns about hidden credit risks in private markets and limits of backward-looking policy—particularly salient amid a government data blackout.

Listeners gain a sophisticated, grounded understanding of ongoing FOMC debates and the evolving lens through which the Fed views both risks and remedies.