Fed’s Miran: The economy is more vulnerable to shocks because policy is restrictive

Federal Reserve Governor Stephen Miran spoke at a televised interview on CNBC on Wednesday. He said that there is now more downside risk than there was a week ago, and that with the shift in the balance of risk, it is more urgent to move towards a more neutral policy.

Key takeaways

There is now more downside risk than a week ago.

With the change in the balance of risk more urgent to get to a more neutral policy.

The economy is more vulnerable to shocks because policy is restrictive.

The difference in my view and the rest of the FOMC is on the speed of the trip to neutral

there is difficulty in knowing the neutral rate exactly.

Uncertainty over the level of the neutral rate does not preclude debate over how it has changed

Changes to immigration have led to a population shock.

The labor market has clearly weakened.

Housing has been moribund, evidence that policy is restrictive.

Two more cuts this year sounds realistic.

Data are backward looking, policy now should be based on where the Fed thinks prices will be a year from now.

See substantial disinflation coming from housing in coming months.

Having few immigrant workers does not put upward pressure on wages.”