Former Fed Gov. Stephen Miran: It'd be 'weird' to hike rates in light of better inflation data

The Federal Reserve risks unnecessary economic contraction by basing interest rate decisions on flawed inflation data. Core PCE currently overstates inflation by approximately 70 basis points due to measurement errors in portfolio management services—which mechanically track stock market gains—and software quality improvements. With the Bureau of Economic Analysis set to revise these methodologies, hiking rates now would be premature and potentially damaging to employment. Monetary policy should remain strictly focused on the Fed’s dual mandate of stable prices and maximum employment, avoiding interference in fiscal or social policy. Furthermore, increasing market liquidity through Treasury buybacks enhances price discovery, providing a clearer signal to the Fed than rigid forward guidance. Policymakers must look beyond current, distorted data to set rates appropriate for the long-term economic outlook rather than reacting to temporary, one-off shocks.