Podcast Summary: Bloomberg Talks – Federal Reserve Governor Stephen Myron Talks Inflation View

Date: October 3, 2025
Host: Bloomberg (Matt Miller and Dani Burger)
Guest: Federal Reserve Governor Stephen Myron
Key Contributor: Michael McKee (Bloomberg International Economics and Policy Correspondent)

Overview

In this episode, Federal Reserve Governor Stephen Myron sits down with Bloomberg hosts and economics correspondent Michael McKee for an in-depth conversation about current monetary policy, the outlook for inflation, the role of data in Fed decision-making, and structural debates around the Fed, the economy, and financial conditions. The discussion is especially timely, taking place during a government shutdown that has delayed key economic data releases.

Key Discussion Points & Insights

1. The Challenge of Setting Policy Amid Data Gaps

• Context: The government shutdown interrupts the regular flow of economic data, complicating the Federal Reserve’s policy-setting process.
• Stephen Myron’s View:
  • Emphasizes that high-quality data is essential for monetary decisions but notes that the FOMC votes only every six weeks.
  • Optimistic that data will be available by decision time but stresses the need for a forward-looking approach.
  • Quote: "Access to high-quality data is of utmost importance when making monetary policy decisions. However...we don't make decisions every day." (01:12)

2. Rising Inflation: What the Numbers Mean

• Michael McKee: Presses on the political sensitivity of inflation—particularly food and gas prices—and the risk of rate cuts.
• Myron’s Response:
  • Policy should be forward-looking rather than solely reactive to current price levels.
  • Biggest focus is on housing costs, as shelter is the largest inflation component.
  • Expectation: Disinflation in services is anticipated, particularly as population shocks (immigration swings) work through the system.
  • Quote: "What matters most of all is the cost of housing because that is the single largest component of the inflation process." (01:59)

3. The Neutral Rate (r-star) Controversy

• McKee: Challenges Myron’s low estimate of the neutral rate given robust growth and low unemployment.
• Myron:
  • Clarifies that he doesn’t see the neutral rate as zero; his models suggest about 0.5%.
  • Asserts that various shocks (fiscal, population) pushed the neutral rate higher last year but now it's declining.
  • Models use forward-looking expectations for inflation and output, especially given recent population volatility.
  • Quote: "I think it's imperative to use forward-looking forecasts that incorporate something like [population shocks]." (06:37)

4. How Should Financial Conditions Guide Policy?

• Dani Burger: References Myron’s past emphasis on financial conditions and their bearing on policy, including loose conditions and stock market highs.
• Myron:
  • Neutral rate has come down as fiscal deficits and immigration have slowed.
  • Policy has become tighter, even if financial conditions appear loose.
  • Financial conditions also reflect non-monetary changes—regulation, tax, and trade.
  • Housing finance remains tight.
  • Quote: "It can be a mistake to look at financial conditions and infer something necessarily about the stance of monetary policy because they can be driven up by other things." (09:29)

5. What Data Would Change Myron's Mind?

• Burger: Asks if any incoming data might alter his argument for rate cuts.
• Myron:
  • Services inflation—especially housing—is the key sticky area he watches.
  • Signs of renewed rent increases or a reversal in immigration trends would change his view.
  • Quote: "If something were to happen that tells me that that channel [of disinflation] is invalidated—that there’s some shock pushing rents materially higher—the benign inflation forecast I have would have to be adjusted." (11:02)

6. Fiscal Policy, Tariffs, and the Deficit Framework

• McKee: Probes Myron’s argument that both tax cuts and tariffs can lower the deficit.

• Myron:

  • Distinguishes between effects based on the elasticities of supply and demand.
  • Tax cuts boost American supply and investment; tariffs impose costs mainly on foreign producers (who are less able to respond than US consumers).
  • Explains why the burden of tariffs falls on exporters, not importers.
  • Quote: "The burden of a tax, a tariff, a subsidy, anything falls on the more inelastic party...overwhelmingly the exporter and not the importer." (13:00)

• McKee’s Skepticism: Points out lack of evidence in import prices.

• Myron: Suggests effects could be offset by currency moves and the structure of importership (e.g., US subsidiaries of foreign firms).

  • No evidence of broad-based consumer inflation due to tariffs.
  • Quote: "For sure what we’re seeing is not a broad-based increase in consumer inflation as a result of tariffs." (16:36)

7. Fed Structure, Diversity of Thought, and Bias

• Matt Miller: Raises Mark Summerlin's criticism that the Fed is geographically and ideologically concentrated.
• Myron:
  • Structural reforms are for Congress, but sees his role as bringing new, out-of-consensus ideas to the Fed.
  • Counterfactual analysis is key—prefers comparing import-intensive goods price trends to broader or international data rather than pre-pandemic trends.
  • Quote: "I view my job as bringing in new and interesting ideas to try and get people to think about things." (19:56)

8. Communication and Market Conviction

• Burger: Notes Myron’s outspoken stance and asks about the importance of market communication, particularly on long-term rates and use of the balance sheet.
• Myron:
  • Saw last year’s long-term yield moves as validation of his view that policy wasn’t tight enough.
  • If yields spiked again, would first reassess the policy stance—reserving balance sheet tools for when rates alone are ineffective.
  • Quote: "My view is probably not to sort of resort to balance sheet at the first opportunity. That balance sheet is the tool you use when your more standard tools can’t work for the problem at hand." (21:23)

9. Lightning Round: Influence, Authority, and White House Contacts

• McKee: Asks if Myron’s position would have influenced more if his initial policy stance was less "extreme."

• Myron:

  • Disputes the characterization; main difference is in the speed of adjustment, not the terminal rate.
  • Too-slow adjustments can risk recessionary gaps.
  • Quote: "If policy is out of whack, you should adjust it at a reasonably brisk pace... Stay restrictive for too long and you really run the risk you don’t want." (22:09)

• On Executive Authority and White House Communication:

  • Myron confirms he does not exercise executive authority and has not been asked by the President to take policy action.
  • Last spoke to the President only upon being sworn in.
  • Quote: "He shares his views about where monetary policy should be, but he shares that with the world." (23:41)

Notable Quotes & Memorable Moments

| Timestamp | Speaker | Quote | |-----------|---------|-------| | 01:12 | Stephen Myron | "Access to high-quality data is of utmost importance when making monetary policy decisions. However...we don't make decisions every day." | | 01:59 | Stephen Myron | "What matters most of all is the cost of housing because that is the single largest component of the inflation process." | | 06:37 | Stephen Myron | "I think it's imperative to use forward-looking forecasts that incorporate something like [population shocks]." | | 09:29 | Stephen Myron | "It can be a mistake to look at financial conditions and infer something necessarily about the stance of monetary policy because they can be driven up by other things." | | 11:02 | Stephen Myron | "If something were to happen that tells me that channel [of disinflation] is invalidated...the benign inflation forecast I have would have to be adjusted." | | 13:00 | Stephen Myron | "The burden of a tax, a tariff, a subsidy, anything falls on the more inelastic party...overwhelmingly the exporter and not the importer." | | 16:36 | Stephen Myron | "For sure what we’re seeing is not a broad-based increase in consumer inflation as a result of tariffs." | | 19:56 | Stephen Myron | "I view my job as bringing in new and interesting ideas to try and get people to think about things."| | 21:23 | Stephen Myron | "My view is probably not to resort to balance sheet at the first opportunity."| | 22:09 | Stephen Myron | "If policy is out of whack, you should adjust it... Stay restrictive for too long and you really run the risk you don't want."| | 23:41 | Stephen Myron | "He shares his views about where monetary policy should be, but he shares that with the world."|

Key Timestamps for Important Segments

• Access to Data/Fed Shutdown Complications: 00:46–01:38
• Housing and Services Inflation Outlook: 01:59–02:48
• Neutral Rate Debate (r-star): 02:48–05:09
• How to Use and Interpret Taylor Rule: 05:09–07:45
• Financial Conditions Channel: 08:54–10:47
• What Would Change Myron's Inflation View: 11:02–12:32
• Taxes, Tariffs, and Deficit Debate: 12:32–16:44
• Fed Structure, Ideological Diversity: 16:44–19:56
• Balance Sheet and Long-Term Rate Management: 20:21–21:51
• Lightning Round on Fed Influence and Authority: 21:51–23:33

Tone & Language

Stephen Myron is direct, analytical, and unafraid to challenge consensus views—constantly returning to data, modeling, and forward-looking analysis. He explains complex economic mechanisms in plain English, often with teaching moments around core economic concepts. The hosts probe both technical aspects and the politics-of-policy, while Myron pushes for clarity in analytical frameworks and regularly questions popular narratives.

For Listeners Who Missed the Episode

This episode offers a deep dive into the thinking of a contrarian Fed governor, with valuable insights into how monetary policymakers weigh data, deal with uncertainty, and interpret both fiscal and international forces in shaping policy. Myron’s discussions on housing, the role of forward-looking models, and the nuanced effects of tariffs and tax policy provide a masterclass in economic reasoning. The conversation also touches on the importance of diverse perspectives within major institutions like the Fed.