Federal Reserve Governor Miran delivered a notable policy shift during his address at the Managed Funds Association’s Policy Outlook 2025 in New York on October 7. He reiterated that the neutral rate — the interest level that neither stimulates nor restrains the economy — has likely declined over the past year. This suggests that current monetary policy may be more restrictive than intended, increasing the risk of an unnecessary economic slowdown if high rates persist.
Miran emphasized that the federal funds rate should ideally hover around the mid-2% range, significantly below the current 4.00%–4.25% target. His stance contrasts sharply with other policymakers, reflecting his confidence that continued housing disinflation will help ease overall inflation. “I’m more sanguine on inflation than many others,” he noted, estimating the real neutral rate near 0.5% and urging caution when interpreting such theoretical measures.
While Miran acknowledged that advances in artificial intelligence could eventually raise productivity and lift the neutral rate, he said current data point in the opposite direction. His softer outlook marks a major pivot from last year, when he opposed rate cuts. He attributed this shift to evolving immigration and fiscal trends that now justify a more accommodative approach.
The timing of Miran’s remarks coincided with a volatile day in the crypto market. Bitcoin slipped 2.6% to around $121,500 after briefly hitting $126,000, while Ethereum eased to the $4,450 range. BNB, however, surged 7.1%, showing renewed strength among altcoins. Analysts suggest Miran’s dovish tone could spark optimism across digital assets, as lower rates typically weaken the dollar and boost demand for cryptocurrencies. Increased liquidity expectations and potential institutional inflows — already exceeding $14 billion in Bitcoin ETFs this quarter — may further support market momentum heading into year-end.
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