Here's something you don't see every day: Federal Reserve officials who usually disagree on just about everything have found rare consensus on inflation. Both New York Fed President John Williams and Fed Governor Stephen Miran believe inflation is heading in the right direction, which is notable because these two aren't exactly known for singing from the same hymnal.

Unusual Agreement on Cooling Prices

Williams, a longtime Fed economist and close ally of Chair Jerome Powell, shares common ground with Miran, who happens to be a key adviser to President Donald Trump. In separate speeches on Monday, both expressed confidence that inflationary pressures are easing.

Miran took a particularly interesting approach, essentially dismissing the official inflation statistics. He claims that "underlying" inflation is running below 2.3%, not far from the Fed's 2% target. The official rate of 2.8%? He chalks that up to lingering pandemic effects on housing inflation and quirks in how statisticians measure financial advisory fees when the stock market climbs.

Williams offered his own optimistic take, noting that tariffs have had a "more muted and drawn out" impact on prices than many feared. He's forecasting inflation will ease to just below 2.5% next year, then gradually decline to the Fed's 2% target by 2027.

"I expect tariffs will have a largely one-off price level effect that will be fully realized in 2026," Williams said.

Rate Cuts and Rising Concerns

This optimism arrives as the Fed walks a tightrope between controlling inflation and supporting a weakening labor market. The central bank cut interest rates by 25 basis points to 3.5%–3.75% in its December meeting, marking the third consecutive reduction. Cutting rates while inflation remains elevated has sparked notable internal disagreement within the Fed.

Not everyone is buying the rosy scenario. Former Fed economist Claudia Sahm warned that further rate cuts could actually signal a troubled economy. She's urging policymakers to focus on underlying fragility in the job market, cautioning that additional cuts might indicate the economy is weaker than it appears.

Economist Peter Schiff has also been vocal in his criticism, warning that the Fed's decision to cut rates and resume purchasing Treasury bills could lead to a dangerous return to quantitative easing.