Ahead of Fed Meeting, Former Governor Miran Says Rate Hike Would Be ‘Weird'

Ahead of the Fed's September meeting, Stephen Miran, a former Federal Reserve governor, said a rate hike right now would be a mistake. He argued that recent inflation data are distorted, not genuinely elevated.

Speaking on CNBC's Squawk Box, Miran said the Fed's preferred gauge is the Personal Consumption Expenditures (PCE) index. He said it has broken from its usual link to the Consumer Price Index (CPI) by about a percentage point.

Portfolio Fees Distort the Inflation Picture

Miran said core CPI is running near 2.5%, a historically normal level. He said the usual 40-basis-point CPI-to-PCE gap would put core PCE near 2.1%.

Core PCE instead rose 0.2% in July. It held at 3.3% year over year, matching June's pace. Miran called that inversion mostly measurement error.

He attributed nearly 70 basis points of the gap to two factors. Portfolio management fees rise mechanically as stock prices climb.

Software price increases, he said, wrongly count AI upgrades as inflation instead of quality gains.

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