Federal Reserve policy expectations are being re-litigated heading into year-end. In a Bloomberg TV interview, Fed Governor Stephen Miran argued that inflation readings may have been distorted by shutdown-related anomalies and that failing to keep cutting could raise recession risk, according to comments summarized by the FT.
Context matters. The Fed has been easing steadily since late 2024. Miran voted for a 50 bp cut at the December meeting, even as the committee delivered a 25 bp move, and he framed the next phase as an approach toward neutral rather than a rapid pivot. The same note highlights key rate markers: the 10-year yield is around 4.162%, the 2-year around 3.495%, and 30-year mortgage rates are back near 6.22% after peaking above 7%.
The immediate impact is less about a single governor and more about the debate he signals inside the Fed: whether policy is already close to neutral or still meaningfully restrictive. Miran said the case for another 50 bp cut has “diminished somewhat,” but he still pressed the idea that the policy rate should continue adjusting lower, per the FT recap. That split keeps markets sensitive to every incremental data point.
How it plays out this week. Investors will parse delayed releases stemming from the U.S. shutdown, including a preliminary Q3 GDP read and backdated PCE inflation updates, as flagged by Yahoo Finance. If those prints show cooling demand and benign inflation, the “keep cutting” camp gains traction. If they show resilience, longer yields could reprice higher even if the Fed eases.
For portfolios, the practical question is timing, not ideology. Rate cuts only help risk assets if they arrive before credit conditions deteriorate, so track incoming growth and inflation data together, not in isolation.
