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Stephen Miran, Chair of the Council of Economic Advisers, predicts core goods and housing inflation will decline, potentially bringing 12-month PCE inflation to the Fed’s 2% target within a year. The Fed Rate Predictions for End of 2026 market reflects this dovish outlook, with odds of the upper bound being 4.25% or higher expected to decrease.
Market reaction
Miran’s forecast is consistent with his previous stance on disinflation driven by lagging shelter inflation and a negative population shock. This supports the likelihood of rate cuts and is moving sentiment in the Fed Rate Predictions for End of 2026 market. The market currently lacks specific odds, but Miran’s views are expected to push trader sentiment toward a lower federal funds rate by year’s end. The Fed Decisions from March to June market is also affected, with Miran’s stance increasing the likelihood of a Cut-Pause-Pause sequence.
Why it matters
Miran’s perspective could signal a shift in Fed policy toward easing, which would affect interest rates and broader economic forecasts. If his predictions about core goods disinflation and housing cost declines prove correct, the Fed would have room to cut rates more aggressively than current market pricing implies. A YES share in the rate cut sequence market could offer substantial returns if this plays out.
What to watch
Traders are tracking data that could confirm the Cut-Pause-Pause sequence, particularly lower CPI/PCE figures or dovish statements from Jerome Powell. Upcoming FOMC meetings and any comments from Powell or other Fed officials will be the next catalysts. Lower-than-expected inflation prints would further shift market odds toward more aggressive cuts.
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