Bloomberg Talks Podcast Summary

Episode Title: Fed’s Miran Talks Neutral Rate, Tight Policy, Rate Cuts
Date: September 25, 2025
Host(s): Bloomberg News Team
Featured Guest: Governor Stephen Myron, Federal Reserve Board

Episode Overview

This episode features an in-depth interview with the Federal Reserve’s newest governor, Stephen Myron. Diverging from many of his colleagues, Myron advocates for an aggressive pace of interest rate cuts, citing evolving economic fundamentals such as shifts in fiscal and immigration policies. The conversation explores the logic behind his lower neutral rate estimate, the risks of overly tight policy, how monetary policy connects to financial conditions, and the outlook for housing and inflation.

Key Discussion Points & Insights

1. Myron’s Entry to the Federal Reserve and FOMC Culture

• Myron describes his initial experiences at the Fed as unexpectedly collegial and focused on “making decisions by arguing on the merits of the economics and the merits of policy.”
  • Quote: “We make policy, as the chairman said last week, by persuasion. And so I will continue to try to lay out my views and make the case as best as I can.” (00:59)

2. Divergence Within FOMC on Rate Path

• Myron acknowledges he is on the low end of the committee’s rate projections (“the dots”), but states the divergence is more about the speed of returning to neutral, not the ultimate level.
  • Quote: “It’s really just about the speed with which we come down to what's closer to neutral.” (01:56)

3. Defining the Neutral Rate and Why It’s Falling

• Myron believes the neutral rate was higher last year due to fiscal deficits (fiscal policy) and a surge in population (immigration), which have now reversed—leading to a lower neutral rate.
• Sharp drops in immigration have caused “the biggest negative population growth shock in my lifetime,” affecting labor supply and thus the neutral rate.
• As these drivers shift, monetary policy is becoming increasingly tight—even if the Fed is not cutting rates—posing emerging risks to employment.
  • Quote: “Now policy is more tight than people believe. And this has happened recently… The longer that policy stays excessively restrictive, the greater the risks to the downside for the economy.” (03:45)

4. Tight Policy Despite Buoyant Asset Markets

• Responding to skepticism about tightness given strong stock markets and tight credit spreads:
  • Myron highlights divergent conditions, noting distress in housing and differences between policy impacts and financial market performance.
  • Emphasizes the role of non-monetary policies (tax incentives, deregulation) in shaping the economy and markets, independent from interest rates.
  • Quote: “I think it's a mistake to conflate the state of financial conditions with monetary policy. They're connected, they're related, they affect each other, but they're not exactly the same thing.” (06:19)

5. Why Rapid Rate Cuts are Essential

• Myron urges proactive rate cuts rather than waiting for clear evidence of economic deterioration.
• He frames the risk asymmetrically: keeping policy too tight for too long may lead to material employment losses.
  • Quote: “I would rather act proactively and lower rates as a result ahead of time rather than wait for some, you know, giant catastrophe to occur because you suddenly wake up and find out that you are resuming those dynamics.” (07:53)

6. Fed’s Reaction Function to Inflation

• Myron states the Fed should pay attention not just to the level and persistence of inflation, but especially its causes.
• Distinguishes between shocks likely to be transitory (VAT or tariff changes) and more persistent, demand-driven inflation.
  • Quote: “Monetary policy shouldn't respond necessarily to fiscally mandated price changes because that's not indicative of changes to the underlying supply, demand, balance in the economy…” (10:27)

7. The Role of Housing and Immigration

• Housing inflation is driven primarily by supply-demand imbalances, which have been deeply affected by dramatic population swings.
• Myron references research showing one-to-one elasticity between immigrant renter growth and rental prices.
  • Quote: “A 1% increase in the number of immigrant renters leads to a 1 percentage point change in the rents.” (11:24)
• He disagrees that immigration is purely a short-term story, expecting its economic implications to persist for at least another three years.
  • Quote: “I'm not convinced that immigration is really a short term story.” (12:13)

8. Myron’s Tenure and Service

• Myron expresses commitment to public service, sidestepping questions about staying at the Fed beyond the year.
  • Quote: “I'm happy to serve this country in any way that I'm asked to do so. But personnel decisions are not decisions that I make.” (12:36)

Notable Quotes (with Timestamps)

• On FOMC Decision-Making:
  “We make policy, as the chairman said last week, by persuasion. And so I will continue to try to lay out my views and make the case as best as I can.” (Governor Myron, 00:59)

• On Policy Tightness:
  “Now policy is more tight than people believe... The longer that policy stays excessively restrictive, the greater the risks to the downside for the economy.” (Governor Myron, 03:45)

• On Financial Markets vs. Policy:
  “I think it's a mistake to conflate the state of financial conditions with monetary policy. They're connected, they're related... but they're not exactly the same thing.” (Governor Myron, 06:19)

• On Need for Proactive Policy:
  “I would rather act proactively and lower rates as a result ahead of time rather than wait for some, you know, giant catastrophe to occur.” (Governor Myron, 07:53)

• On Interpreting Inflation:
  “Monetary policy shouldn't respond necessarily to fiscally mandated price changes because that's not indicative of changes to the underlying supply, demand, balance in the economy…” (Governor Myron, 10:27)

Key Segment Timestamps

| Timestamp | Segment | | ---------- | ---------------------------------------------------- | | 00:59 | Myron’s FOMC experience and approach to persuasion | | 01:56 | Divergence in rate outlooks – disagreement on pace | | 02:38–04:37| Technical dive into the neutral rate and policy | | 05:02–07:05| Why financial markets’ strength isn’t contradictory | | 07:32–08:51| Argument for rapid rate cuts, policy risks | | 09:19–10:46| Fed’s approach to temporary vs. persistent inflation | | 11:03–12:13| Housing, immigration and inflation | | 12:27–12:42| Myron on service and tenure |

Tone & Language

• Myron speaks methodically, with technical specificity, but is collegial and clear about the uncertainties and policy dilemmas facing the Fed.
• Hosts ask pointed, sometimes skeptical questions but maintain a constructive tone.

Summary

Governor Stephen Myron outlines a case for rapid normalization of Fed policy based on new economic realities, warning of hidden risks if the Fed lags behind shifts in population and fiscal dynamics. He urges a nuanced reading of inflation data and financial signals, repeatedly stressing the importance of looking beneath the surface—both for data and for policy appropriate to the moment. The episode provides clarity on why some at the Fed are arguing for sharper, swifter rate cuts, even as markets and some economic data remain strong on the surface.