One of US President Donald Trump’s top economic advisors, Stephen Miran, won by a narrow vote margin of 48-47 votes to get a seat on the Federal Reserve’s governing board, giving the White House greater influence over the central bank just two days before it begins its policy meeting on September 16.
Miran was approved by the Senate Banking Committee last week with all the Republicans voting in favour, and all Democrats voting against. Lisa Murkowski is the only Republican to have voted against Miran.
Miran would be completing an unexpired term that ends in January, after Adriana Kugler unexpectedly stepped down from the board August 1.
His approval has sparked concerns about the Federal Reserve’s endangered independence as Trump attempts to gain more control over the bank’s policies, especially after Miran said during a committee hearing earlier this month that he would keep his job as chair of the White House's Council of Economic Advisers, though would take unpaid leave. He also said he would resign from his White House job if appointed to a longer term.
Also Read: World shares sink amid Trump-Fed Res feud
Senior Democrat leaders have been vehemently opposed to Miran’s nomination, saying Miran would be “nothing more than Donald Trump's mouthpiece at the Fed.”
During his September 4 hearing, Miran had vowed to “act independently, as the Federal Reserve always does”, based on his own “personal analysis of economic data”.
Last year, in fact, Miran had criticised what he called the “revolving door” of officials between the White House and the Fed, in a paper he co-wrote with Daniel Katz for the conservative Manhattan Institute. Katz is now chief of staff at the Treasury Department.
Trump faces setback in unseating Fed Res governor Lisa Cook
An appeals court ruled Monday that Lisa Cook, whom Trump had tried to unseat, can remain a Federal Reserve governor.
The ruling comes as a setback to Trump as he attempts to shape the American central bank. His administration said they would turn to the Supreme Court to unseat Cook. But, before the Fed’s much-awaited two-day meeting that starts on September 16 to consider its next interest rate move, Cook’s lawsuit seeking to permanently block her firing must make it way through the courts.
A federal court had previously ruled in her favour, saying the Trump administration did not have proper cause to remove her.
Trump’s attempt to fire Cook, who was appointed by former President Joe Biden to a term that ends in 2038, is unprecedented as no president has fired a sitting Fed governor in the agency's 112-year history.
The Fed's seven-member governing board, which was designed to be largely independent from day-to-day politics, has come under attack after Trump assumed power for the second time as President this January.
This interference comes as US economy is entering an uncertain and difficult period with inflation remaining stubbornly above the central bank's 2 per cent target, though it hasn't risen as much as economists had feared when Trump first imposed sweeping tariffs on nearly all imports. Worsening inflation would typically force the Fed to raise borrowing costs, or at least keep them elevated.
At the same time, hiring has weakened considerably in the US as unemployment rate rose last month to a still-low 4.3 per cent. The central bank often takes the opposite approach when unemployment rises, cutting rates to spur more borrowing, spending and growth.
Chair Jerome Powell signalled in a high-profile speech last month the Fed would likely cut its key rate at this meeting, from about 4.3 per cent to 4.1 per cent. Other borrowing costs, such as mortgage rates and car loans, have already declined in anticipation of the cut and could move lower. Meanwhile, Trump has demanded much deeper cuts.
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