Trump announces intent to appoint Stephen Miran for the Federal Reserve position
The recent nomination of Stephen Miran, the chair of the White House's Council of Economic Advisers, to temporarily join the Federal Reserve's board of governors has sparked debate about the potential impact on the central bank's independence.
Before joining the Trump administration, Miran had advocated for reform of the US central bank, including shorter term lengths for officials and making the 12 regional Fed banks public bodies. He also wanted to make it easier to fire Fed officials and halt a "revolving door" between the central bank and the White House.
Miran's nomination comes as several Trump administration officials, including the Treasury secretary Scott Bessent, have called for an overhaul of the governance of the Fed. Trump is expected to use the seat filled by Miran until January as a means to replace Jerome Powell as Fed chair.
Powell's term as chair ends in May 2026, but he can stay on the Fed board until January 2028. Adriana Kugler, another member of the central bank, has announced plans to leave before her term ends in January.
The Federal Reserve's decision to keep rates on hold this year has been harshly criticized by President Trump. JPMorgan expects a quarter-point rate cut at the Fed's next meeting in September due to Trump's announcement.
Miran's dovish stance may push the Fed toward more accommodative policies, such as maintaining lower interest rates or slower tightening, even if inflation risks persist. This could conflict with traditional Fed goals of balancing inflation and employment.
His appointment is perceived as increasing the Fed's political alignment with the White House, possibly undermining the Fed's reputation as an independent institution that bases decisions purely on economic data. This alignment risks a closer, politicized relationship that could invite criticism or regulatory conflicts.
Marco Casiraghi, an economist at Evercore ISI, believes that Miran, as a Trump loyalist, would continue to advocate for lower rates and vote for rate cuts in FOMC meetings once on the Fed board. Some economists have begun to anticipate a reduction in borrowing costs next month due to a sharp slowdown in hiring this summer.
Stephen Miran's appointment to the Federal Reserve's board of governors is widely viewed as potentially threatening the independence of the central bank and influencing monetary policy toward a more dovish stance. This appointment fuels an existential threat to the Fed's autonomy by making it more susceptible to political pressures from the White House, especially given Miran's alignment with former President Trump's preferences.
Miran is expected to join fellow Trump appointees Christopher Waller and Michelle Bowman in supporting the president's calls for rate cuts. His tenure on the board may shift the Fed's monetary policy framework and its institutional dynamics with the executive branch, raising concerns about the preservation of central bank independence.
[1] Source: JPMorgan, Manhattan Institute think-tank
- The appointment of Stephen Miran to the Federal Reserve's board of governors, as a Trump loyalist, may push the Fed towards a more dovish monetary policy, potentially conflicting with traditional Fed goals of balancing inflation and employment.
2.Miran's advocacy for lower interest rates and his alignment with former President Trump's preferences could threaten the Fed's autonomy by making it more susceptible to political pressures from the White House.
3.Considering the potential influence of Miran, fellow Trump appointees, and the president's calls for rate cuts, the Fed's monetary policy framework and its relationship with the executive branch may undergo significant changes, raising concerns about the preservation of central bank independence.
