Washington (AFP) – Donald Trump’s pick to join the Federal Reserve’s board of governors pledged to uphold US central bank independence if confirmed, but was coy about leaving his current White House role in the process, as the institution faces growing pressure from the president to slash interest rates.
Stephen Miran, who chairs the White House Council of Economic Advisers (CEA), faced pointed questions at his confirmation hearing before the Senate Banking Committee on his independence from the Trump administration. The speed at which Miran is appointed will be key, given that he could take up the Fed role by the time the bank’s rate-setting Federal Open Market Committee (FOMC) holds its next meeting from September 16-17. Critics accuse Trump of seeking to tip the Fed’s board in favor of his stated goal of lowering interest rates.
On Thursday, Miran did not commit to resigning from the CEA, saying that he received counsel advice to take a leave of absence instead. Upon further questioning, he said that he would step down if confirmed to a longer term at the Fed. Miran sought to reassure lawmakers in his opening remarks, however, saying that the FOMC “is an independent group with a monumental task, and I intend to preserve that independence.” He added that the most important job of the central bank is to prevent depressions and hyperinflation. “Independence of monetary policy is a critical element for its success,” he said, stressing that his views and decisions will be driven by his analysis of the macroeconomy.
Trump has blamed current interest rates as a reason that the housing market is sluggish, citing benign inflation data too in calling for cuts — which tend to provide a boost for the economy. But Fed policymakers are wary that slashing rates too quickly could risk higher inflation over the long term and are monitoring the effects of tariffs on prices as well.
Senator Elizabeth Warren, the top Democrat on the banking committee, charged Thursday that Trump has launched an “all-out assault” on the Fed’s independence. She challenged Miran to prove his independence from Trump. Minnesota Senator Tina Smith said that Miran’s nomination was taking place quickly, arguing that the president “wants loyalists on the Fed board.” The seven members of the Fed’s powerful board of governors sit on the central bank’s 12-member FOMC, voting on interest rate decisions.
Trump had nominated Miran to the Fed’s board to finish out the term of Adriana Kugler, an appointee of former president Joe Biden who resigned before her term was due to end in January. The personnel shift came, however, as the Fed faced intensifying calls from the US president to cut interest rates significantly. Trump has repeatedly lashed out at Fed Chair Jerome Powell for not cutting rates sooner, calling him a “numbskull” and “moron.”
Trump has also moved to fire another Fed governor, Lisa Cook, citing allegations of mortgage fraud. Cook, the first Black woman to serve on the Fed’s board, is fighting to stay in her role. She has not been charged with a crime, and the alleged incidents occurred before she became a Fed governor. But the Wall Street Journal reported Thursday that the Justice Department has opened a criminal investigation into her. Since its last rate cut in December, the Fed has held interest rates at a range between 4.25 percent and 4.50 percent this year. Powell has opened the door to lowering levels at the bank’s next policy meeting this month.
© 2024 AFP
