Current above-target inflation does not reflect underlying supply and demand dynamics that are generating price increases much closer to the central bank's 2% target, Federal Reserve Governor Stephen Miran said Monday, asserting that "prices are now once again stable."

The last U.S. inflation report showed the Fed's preferred measure of inflation was increasing at a 2.8% annual rate, versus the Fed's 2% target.

But Miran argued the shelter inflation component of that is backward-looking and doesn't reflect an ongoing slowdown in rent increases, while some of the other factors adding to it, including portfolio management fees that are based on current high asset prices, don't reflect the underlying pace of price increases.

"Excess measured inflation is unreflective of current supply–demand dynamics. Shelter inflation is indicative of a supply–demand imbalance that occurred as much as two to four years ago, not today," Miran said in comments prepared for delivery at Columbia University. "Given monetary policy lags, we need to make policy for 2027, not 2022."

Once stripped of those factors, Miran said he estimated that "underlying inflation is running below 2.3%, within noise of our target. Keeping policy unnecessarily tight because of an imbalance from 2022, or because of artifacts of the statistical measurement process, will lead to job losses."

Miran dissented at last week's Fed decision to cut interest rates by a quarter of a percentage point, preferring a larger half-point cut. It is his third such dissent since joining the Fed in September while on leave as a top advisor to President Donald Trump.

At last week's meeting two of Miran's colleagues dissented in favor of not cutting rates at all because inflation has not recently progressed towards the Fed's target, a fact attributed by many Fed officials to goods price increases they associate with the Trump administration's import tariffs.

Miran acknowledged he did not have a full explanation for why inflation is as high as it is right now, and particularly did not know why the prices of goods are increasing. He says that his analysis of recent data, however, indicates it is not due to the Trump administration's tariffs.

"I accept I don’t know what’s driving higher goods inflation currently," Miran said, but allowed the "unsavory possibility" that it is "settling in" at a higher level than before the pandemic.

"American families are still rightly distraught," from recent inflation, and "unhappy with affordability," Miran said. But, "prices are now once again stable, albeit at higher levels. Policy should reflect that."