With another cliff approaching, the Federal Reserve appears to be finally willing to take the plunge this week. Futures markets are now betting on a rate cut – the first since December 2024. Economic conditions are changing, particularly because of the uncertainty surrounding tariffs. This likely puts pressure on the central bank to raise interest rates at its next meeting. In late July, the Federal Open Market Committee made a historic vote on an equally consequential decision. With a firm 9-2 majority, they decided to maintain the status quo rates.
President Donald Trump’s recent nomination of Stephen Miran would fill the spot that Adriana Kugler vacated in a surprise move mid-August. This move happens against the backdrop of a widening window for a rate cut. If confirmed, Miran plans to take an unpaid leave of absence from his role as chair of the White House’s Council of Economic Advisors. His nomination has an uphill climb through a risky legal minefield. Just recently, a judge stopped Trump from removing Fed Governor Lisa Cook, who now faces ongoing litigation over her firing.
Miran’s confirmation has the potential to be historic. The next central bank’s meeting could come as soon as one day after he would be expected to be confirmed. Critics, including Senate Banking Committee Ranking Member Elizabeth Warren, say the appointment of Miran bodes ill.
“One day of serving as the President’s chief economist and a supposedly independent Governor at the Fed would be one day too many,” – Elizabeth Warren.
The prospect of Miran’s deep potential influence over the committee should alarm everyone. Most Democrats and progressive economists have been very concerned about the Federal Reserve’s independence from short-term political pressures.
In response to questions about his tenure, Miran stated, “The term for which I’ve been nominated is four and a half months. If I am nominated and confirmed for a longer term than just a handful of months, I would absolutely resign.” He has pledged to retire if he does remain past this interim period. This decision reflects his recognition of how important it is for the new chair to protect the Fed’s independence.
Trump has requested a federal appeals court to pause a lower-court ruling related to Cook’s case ahead of the Fed meeting. The outcome of this legal battle could further complicate matters for the central bank as it navigates economic uncertainties and leadership changes.