Miran, a nominee for the Federal Reserve, is pleased with the latest Bureau of Labor Statistics data. He claims there’s no proof that tariffs are causing inflation. While data can sometimes show unusual results, he believes current price changes are more about market factors than tariffs. He specifically pointed out that US cars and airfares are not affected by tariffs. Miran talked about factors contributing to inflation, suggesting illegal immigration might be causing higher rents. He also indicated that changes in immigration policies could lead to lower prices in the service sector. He emphasized that the Consumer Price Index (CPI) data is rarely revised and recommended incentives to improve response rates.

Nomination Status

He avoided discussing his nomination status or existing Federal Reserve policies, as it depends on when the Senate acts. Miran noted that tariffs burden the less adaptable group and expects those tariffs will mainly impact the affected countries. While he can’t clearly state his views on monetary policy, it seems he favors immediate interest rate cuts. Miran is nominated to replace Adriana Kugler, who left the board on August 8. Federal Reserve board members have a crucial role, holding a permanent vote in all interest rate meetings. We’re closely monitoring Miran’s comments, as he seems to support a more dovish approach. His belief that inflation is under control and that tariffs aren’t affecting domestic prices is important. This raises the possibility of lower interest rates soon. His viewpoint aligns with the recent Consumer Price Index report from July 2025, which showed a slight increase of only 0.1%, lower than the anticipated 0.2%. This slowdown, particularly in core goods, supports the notion that inflation is manageable, even though the core services component stayed stable at 0.3%.

Interest Rate Derivatives

Given this context, it’s wise to consider preparing for a more dovish Federal Reserve using interest rate derivatives. Options on SOFR futures, especially for the December 2025 and March 2026 contracts, are seeing a rise in call volume as traders bet on rate cuts. The market now estimates a nearly 60% chance of a rate cut by the December 2025 meeting, up from 40% last month. We recall the aggressive rate hikes from the Fed in 2022, which came after they initially misjudged inflation. This situation feels different, with a potential board member indicating a wish to cut rates early. This approach could avoid the sudden policy shifts we experienced from 2021 to 2023. For equity derivative traders, this outlook might lower long-term market volatility. Traders are selling VIX futures for contracts due in late 2025 in anticipation of a more stable market, should the Fed signal a cycle of easing. This makes strategies like selling puts on major indices more appealing, assuming this dovish outlook is confirmed. Create your live VT Markets account and start trading now.

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