Federal Reserve Governor Stephen Miran Talks Oil Prices, Monetary Policy

Summary

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Bloomberg Talks – Federal Reserve Governor Stephen Miran Talks Oil Prices, Monetary Policy

Date: March 23, 2026
Host: Bloomberg
Guest: Governor Stephen Miran, Federal Reserve

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Overview

In this episode, Bloomberg sits down with Federal Reserve Governor Stephen Miran, the only dissenting voice at the latest FOMC meeting, to discuss his continued push for interest rate cuts amid recent oil price shocks and shifting market dynamics. The conversation explores the Fed's response to energy-driven inflation, the outlook for monetary policy, and the complex interplay between inflation risks and labor market softness.

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Key Discussion Points & Insights

1. Market Volatility & Policy Response

• [00:37–01:18] The episode opens with a snapshot of current market conditions: equities are surging, bond yields are volatile, and expectations for rate hikes have faded quickly.
• Miran stresses that monetary policy shouldn’t react to short-term headlines:

  “We shouldn’t be making policy based on short term headlines. We should wait for all the information...there’s just not enough information yet about what that looks like.”
  — Governor Stephen Miran [01:18]

2. Oil Price Shocks and Inflation Expectations

• [01:44–02:55] Discussing whether the Fed should “look through” energy shocks:
  • Traditionally, oil shocks mainly affect headline inflation, not core.
  • Miran points out that medium- and long-term inflation expectations remain subdued, and wage pressures are still declining.
  • Key quote:

    “The two exceptions would be if inflation expectations beyond the first year start to move higher...The other reason you would want to respond to an oil shock is if you saw a wage price spiral...Thus far there’s little evidence of that.”
    — Governor Stephen Miran [01:53]

3. Labor Market and Monetary Policy

• [02:55–03:06]
  • Miran says the labor market still needs support, justifying his dissent for a rate cut:

    “The labor market still could use additional support from monetary policy and that’s why I dissented last meeting...”
    — Governor Stephen Miran [02:58]

  • He emphasizes a longer-term perspective over reacting to yesterday’s news.

4. Oil Futures and Impact on Policy Projections

• [03:35–04:20]
  • Miran updated his projection for end-of-year inflation to 2.7% in the Fed’s economic projections, reflecting higher headline numbers.
  • However, he notes that higher energy prices can also depress demand, offsetting some inflationary pressures:

    “Don’t forget, higher oil prices also depress demand. They take money out of the pockets of consumers...that offsets some of the increase in inflation.”
    — Governor Stephen Miran [03:47]

5. Conditions for Considering Rate Hikes

• [04:20–05:36]
  • Miran outlines two conditions that could necessitate rate hikes:
    1. If oil shocks push up long-term inflation expectations.
    2. If a wage-price spiral begins.
    • He observes current negative supply shocks aren’t interacting with accommodative fiscal or monetary policy, unlike in 2021–2022.
  • Notable explanation:

    “It would be highly unusual for the Fed to start looking through them now...But in my view part of the reason [past shocks] reverberated...was because policy settings at the time were very different.”
    — Governor Stephen Miran [04:32]

6. Physical Markets and Second-Round Inflation

• [05:36–06:51]
  • Despite paper market price spikes, the real concern would be broad-based spillovers to core inflation.
  • So far, these effects are limited to sectors like airlines, but not broad-based—no sign yet of a persistent, troubling trend.
  • Miran reiterates that demand-boosting fiscal and monetary policies are not present as they were during previous shocks.

7. Is Now the Time to Cut Rates?

• [06:51–08:23]
  • Miran asserts his case for gradual rate cuts remains, proposing four cuts this year (after initially projecting six).
  • He acknowledges the balance of risks has shifted on both inflation and unemployment:

    “The inflation risks have got a little more concerning, but the unemployment risks have gotten more concerning too...I don’t think it [the balance of risks] changed symmetrically.”
    — Governor Stephen Miran [07:40]

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Notable Quotes & Memorable Moments

• On headline vs. core inflation:

  “Oil shocks hit headline inflation, but they don't really pass that much into core...”
  [01:53]

• On the uniqueness of the current policy environment:

  “We’re not hitting the gas on demand...that would interact with the higher oil price in a way that would reverberate these prices through the economy. That’s not the case at all.”
  [04:32]

• On why he remains a policy dissenter:

  “I viewed the labor market as continuing its gradual softening trend...That trend has been in place for three years. I’ve seen nothing that would convince me the trend has stopped.”
  [07:40]

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Segment Timestamps

• 00:37–01:18: Market background, Federal Reserve policy context
• 01:18–02:55: Miran on policymaking discipline, inflation expectations, and labor
• 02:55–03:47: Labor market, FOMC dissent, oil futures
• 03:47–04:32: Economic projections, consequences of oil price changes
• 04:32–05:36: Conditions for rate hikes, historical perspective
• 05:36–06:51: Physical oil market, core inflation spillovers
• 06:51–08:23: Outlook for rate cuts, balance of risks
• 08:23: Close of substantive discussion

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Tone & Takeaways

• The discussion is data-driven, measured, and focused on longer-term outlooks versus reactionary moves.
• Governor Miran consistently brings the conversation back to fundamentals—avoiding knee-jerk responses and focusing on structural rather than temporary market changes.
• Gradualism and “looking through” oil shocks—unless they generate longer-run inflation or wage spirals—anchor Miran’s position.

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This episode provides an excellent inside perspective on evolving central bank thinking in the face of complex economic shocks, and offers a clear rationale for dovish monetary policy, even as headline inflation rises due to energy prices.

Transcript

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[Podcast Host]

so in the market right now, equities near session highs up 2% on the S and P. This bond market, some wild moves earlier on this morning, yields 3.4percent at the front end of the curve high shield we've seen since last summer 385. Now because we've pulled back following those headlines, we're down 5 basis points on the session. We've priced out the easing. At one point we were talking about price again rate hikes at the Federal Reserve. Let's have that conversation right now with the Federal Reserve Governor Stephen Mar and the lone voice dissenting at last week's FOMC meeting, continuing his push for interest rate cuts. Governor Myron joins us now for more. Steve, good to see you.

[Governor Stephen Martin]

Good morning. Thanks for having me back.

[Podcast Host]

Governor, where do we begin with these headlines right here. As a policymaker, as an official, when things are moving this fast, what you do?

[Governor Stephen Martin]

Well, look, we've already had some whiplash this morning and I think that underlines that we shouldn't be making policy based on short term headlines. Right. We should wait for all the information to come in before really changing our outlook. And I think it's just still premature to have a clear view view about what this is going to look like as you look 12 months out. And we because of monetary policy lags, we really need to be looking a year to a year and a half out and there's just not enough information yet about what that looks like.

[Podcast Host]

Communication in the near term, of course, matters. The chairman in the news conference last week really vowing to anchor inflation expectations. Do you think that's a worthwhile pursuit at this point?

[Governor Stephen Martin]

I do. Look, you know, traditional central banking, Federal Reserve wisdom is that oil shocks hit headline inflation, but they don't really pass that much into core as by as much as they do as they do into headline and the two ways that you would want to respond to it. And so therefore you typically look through an oil shock. Now, the two exceptions would be if inflation expectations beyond the first year start to move higher. That hasn't happened thus far. Inflation Expectations for the first year out have moved higher, of course, but as I look at the CPI swap market beyond the first year, there hasn't been that much movement. Medium term, five year, five year, longer term, five year, five year forward. Expectations have actually been coming down lately. Right. So there's no evidence of that. The other reason why you would want to respond to an oil shock is if you saw a wage price spiral. If you saw wage wages responding to oil price increases, gas price increases, that could result in the type of reinforcing inflation dynamics that you want to forestall. Now again, thus far there's little evidence of that. In fact, wage pressures have been declining for the last few years on a steady, steady, steady basis. So that's also something that I don't really see right now.

[Podcast Host]

So the market, the labor market is just not strong enough to worry about it.

[Governor Stephen Martin]

I think the labor market still could use additional support from monetary policy and that's why I dissented last meeting as I have continued to send for, for all previous meetings.

[Podcast Host]

How lonely were you at that committee meeting just last week voting for a 25 basis point reduction in the face of an energy shock? How robust was the conversation around the table?

[Governor Stephen Martin]

Look, I think a lot of people around the table like me were hesitant to draw conclusions from the oil, from the oil news thus far because as I said before, we have to look 12 to 18 months out, not what happened to the oil price yesterday. And so looking 12 to 18 months out, there's still not enough clarity to think that monetary policy itself should adjust in response to what's happened.

[Podcast Host]

Well, check out the oil futures curve. That has changed. I've just had one eye on December over the last three weeks or so that's gone from the 60s and threatening to break out into the 90s. At one point earlier on this morning, that's a change. That's a real step up.

[Governor Stephen Martin]

Now it has and I boosted my, you know, in the summary of economic projections, I boosted my inflation dot for the end of the year to 2.7% reflecting that in part. Right. So there is some expectation of higher headline inflation. However, as I said before, I think it's way too early to draw conclusions that it's bleeding beyond headline inflation in a way that matters for monetary policy. Don't forget, higher oil prices also depress demand. Right. They take money out of the pockets of consumers that we spending on other goods and services and redirects it towards gas and other energy costs and that depresses demand and pause, causes unemployment to move a little Bit higher. That offsets some of the increase in inflation.

[Podcast Host]

Your colleagues this morning, Austan Goolsbee at the Chicago Fed speaking to the press, saying we could see a circumstance where we need to raise interest rates. How high is the bar to raise interest rates? What kind of circumstances would you personally need to see?

[Governor Stephen Martin]

Yeah, so I just laid out a couple of them before. Right. If it looks like the oil, like the oil shock is bleeding into inflation expectations beyond the first year, then you get really concerned about second round effects or it looks like you're starting to cause a wage price spiral, then you get really concerned about second round effects. First round effects are not something you traditionally respond to as a central bank. Now I'll say one thing beyond that, which is that these oil shocks have been things that this Fed has looked through for a long time. Right. It would be highly unusual for the Fed to start looking through them now. And when you think about what happened in 2021 and 2022, we did have negative supply shocks like the oil shock from the Russia Ukraine invasion. But in my view part of the reason why it was able to reverberate through the economy the way it did was because policy settings at the time were very different. Monetary policy and fiscal policy were at all time historical accommodative levels. We were doing $120 billion a month of QE. We were doing $2 trillion fiscal packages at a time. That's not the case right now. We're not hitting the gas on demand that would interact with the higher oil price in a way that would reverberate these prices through the economy. Now that's not the case at all.

[Market Analyst]

But right now we're just seeing price spike on paper market. But what's happening in the physical market is actually a void. We are seeing not just shut ins, but some of these installations going to take years to rebuild. At what point does that start to potentially anchor inflation expectations?

[Governor Stephen Martin]

Yes. So you'd want to see, you'd want to see the oil price shock start to reverberate through, through supply chains and pushing up prices more broadly.

[Market Analyst]

We are though in terms of airlines, diesel, that that means that it's going to be more expensive in terms of some goods and services that are delivered by truck.

[Governor Stephen Martin]

Yeah, there's been a few instances, but you want to see that in a broad based way that starts to bleed into core inflation and boosted and boosted in a way that sort of not just a one off time, but you start to see really second round effects that, that are concerning for the longer term. And if that starts to happen, then you start to get concerned about inflation. And I think that that is what, that is what you did see happen in 2122. And thus far I don't see it happening on a broad basis. Now it could happen. Right. But thus far it hasn't happened on a broad base. You get some idiosyncratic stories like airline prices that are more directly tied to jet fuel, but beyond that you haven't really seen it. And I think part of the reason why is because we're not hitting on the gas, we're not hitting the gas on demand, we're not boosting demand with all time record accommodative policy in a way that would allow pricing to accommodate a supply shock like that.

[Podcast Host]

It's fair to say that I think a lot of Fed watchers watching this right now and I'm getting some reaction from them real time agree with you that this isn't the environment to hike rates. The opposite though is a difficult argument to make. Is it the right time to cut interest rates this quickly, this soon?

[Governor Stephen Martin]

Yes. So as I said before, traditionally you would look through an oil price shock like this, which means that my policy outlook from before is unchanged. And my policy outlook from before would be gradual cuts of interest rates. I had about six cuts for the year. At the last set in December, I reduced that to four cuts for the year in response to the inflation data. Right. That we, that we received between the two, between the two projection periods. So I'm maintaining my outlook that I

[Podcast Host]

had not just said the outlook doesn't change. Forgive me for jumping in, but the balance of risks around the outlook should change. That should change off the back of an energy shock. Isn't that a fair summary of where we should be?

[Governor Stephen Martin]

Well, the balance of risk does change, but I think it's actually changed on both sides equally. The inflation risks have got a little more concerning, but the unemployment risks have gotten more concerning too. Because the negative supply shock, that is the oil prices are also a negative demand shock. You're taking money out of goods and services that are not energy that would have been spent on those goods and services anyway. And I viewed the labor market as continuing its gradual softening trend to the last three years. That trend has been in place for three years. I've seen nothing that would convince me the trend has stopped. Right. That's a very, very powerful medium term trend that's been in place for several years now. And taking money out of goods and services, that's not energy to devote to higher energy prices is exactly the type of thing that worries me that that trend might accelerate. So the balance of risk changed, but I think it got worse on both sides. I don't think it change symmetrically.

[Podcast Host]

Governor, it's good to see you. Thanks for making time for us as always. We appreciate it, sir. Governor Stephen Martin there at the Federal Reserve on the argument for lower interest rates following a major energy shock.

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