SOTS 2nd Hour: Fed Gov. Miran, Fed Chair Powell - LIVE 3/30/26

SPEAKER_1 (0:00)

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SPEAKER_2 (0:28)

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SPEAKER_3 (0:31)

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SPEAKER_5 (0:33)

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SPEAKER_6 (0:36)

I don't think so, Jennifer.

Carl Quintanilla (0:38)

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SPEAKER_3 (0:39)

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SPEAKER_6 (0:41)

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SPEAKER_8 (0:42)

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SPEAKER_5 (0:43)

Right. So we shouldn't get the parachute pants?

SPEAKER_3 (0:47)

These are making a comeback.

SPEAKER_9 (0:49)

I think.

SPEAKER_3 (0:51)

Discover is accepted at 99% of places that take credit cards nationwide. Based on the February 2025 Nielsen Report.

Sara Eisen (0:58)

Good Monday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. We are all back at Post 9 of the New York Stock Exchange. Coming up this hour, Federal Reserve Governor Stephen Miran is with us as the Fed's path gets cloudier here amid surging energy prices tied to the war. Plus, Fed Chair Jerome Powell expected to speak and take questions at Harvard this morning. We're going to take you there live for those remarks. Council on Foreign Relations President Emeritus Richard Haas joins us with the latest on Iran as he warns that a quote stable Middle East is a long shot at this point. We'll kick it off though with the outlook, rising energy prices, mounting stagflation concerns. They have some believing the Fed's next move could actually be a rate hike before the end of the year. Our next guest has been dissenting in favor of bigger cuts at recent meetings. Fed Governor Stephen Miran joins us now for a CNBC exclusive. Welcome. Good to have you.

Stephen Miran (1:49)

Good morning. Thanks for having me back.

Sara Eisen (1:51)

Has your view changed at all as a result of the rising oil prices and diesel prices and fertilizer prices about the outlook for inflation?

Stephen Miran (2:01)

Yes. Traditionally, the Federal Reserve looks through an oil price shock. Now, the reason why we do that is because oil price shocks tend to boost the price level immediately. They flow through into prices very quickly. Gas prices move higher. But monetary policy only hits the economy with lags. If you change monetary policy today, it doesn't affect economic growth, it doesn't affect unemployment or inflation for 12 to 18 months from now. If the oil price boosts the price level today through the gasoline price and other things, but not 12 to 18 months from now, monetary policy simply cannot affect that. Now, the way that that wouldn't work, that this traditional logic the Federal Reserve has always observed, the way that this logic would not work is in one of two scenarios. One is you get a price-wage spiral where wages start moving higher and then prices start moving higher too. There's not really any evidence of that thus far at all.

With the labor market on a gradual cooling trend for the last three years, that seems extremely unlikely. The other way that you would get the oil price shock boosting inflation 12 to 18 months out is if inflation expectations started to get affected. When you look at the inflation expectations, you don't really see that. I like to look at CPI swaps. CPI swaps for the next year moved higher because prices move higher nearly. Exactly as we said. When you look at forward rates, when you look at inflation expectations, one year, one year forward, one year, two years forward, one year inflation, three years forward, they haven't budged. And when you look at medium to long term inflation expectations, like five years, five years forward, they've actually been coming down since this entire thing started. So in order to get an inflation shock from oil that the Federal Reserve can affect, it needs to affect inflation beyond a one year horizon. And there's thus far no evidence of that.

Sara Eisen (3:40)

All of that is true, but there was evidence, first of all, that the Fed's inflation target was higher. I mean, that inflation was higher than the Fed's target going into this, right? And that what this will do is, even if it's in the short term, will have an impact on headline CPI, on PCE. You know, the longer this lasts, and it's now what, we're five weeks in, and there are concerns that it will have a bigger impact on underlying inflation, even if you're not seeing it necessarily in those expectations or wages.