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Fed­eral Reserve gov­ernor Stephen Miran has said that “phantom infla­tion” is dis­tort­ing the US cent­ral bank’s decision-mak­ing and caus­ing it to keep interest rates too high.

Miran, a staunch ally of Pres­id­ent Don­ald Trump and vocal pro­ponent of lower rates, said yes­ter­day that poli­cy­makers should dis­reg­ard near-term “noise” and set bor­row­ing costs for the long term.

“We must be thought­ful in con­sid­er­ing genu­ine under­ly­ing infla­tion­ary pres­sures,” Miran told an audi­ence at Columbia Uni­versity.

The Fed cut rates by 25 basis points at each of its past three meet­ings. Last week it reduced them to a three-year low of between 3.5 and 3.75 per cent.

The rate-set­ting Fed­eral Open Mar­ket Com­mit­tee has been divided over the scale of the cuts and whether to pri­or­it­ise risks to infla­tion or the labour mar­ket. Three of its mem­bers dis­sen­ted from last week’s decision — includ­ing Miran, who wanted a lar­ger cut of 50bp.