Washington (AFP) – The US Senate on Monday narrowly cleared President Donald Trump’s choice for a key role at the Federal Reserve, as the clock ticks down to the central bank’s next policy meeting. The decision came just as a US federal appeals court also ruled Monday night that Fed Governor Lisa Cook can remain in her position while challenging her ouster from the bank — after Trump sought to fire her. Both developments set the stage for the two-day gathering of the bank’s rate-setting Federal Open Market Committee (FOMC), due to begin early Tuesday. All eyes will be on the outcomes of this gathering amid concern over political pressure faced by the independent central bank.
Late Monday, the Republican-majority Senate voted 48-47 to confirm Stephen Miran, who chairs the White House Council of Economic Advisers (CEA), allowing him to join the Fed’s board of governors and the FOMC, which sets interest rates steering the world’s biggest economy. The FOMC’s 12 voting members include the seven members of the Fed’s board of governors. With the latest ruling from the US Court of Appeals for the District of Columbia Circuit, Cook also is due to participate in the gathering. Although the Trump administration could turn to the Supreme Court for further intervention, time is running low before the Fed meeting opens.
Miran’s swift confirmation and Cook’s lawsuit come as Trump intensified pressure on the central bank to slash interest rates this year, often citing benign inflation figures in doing so. But critics worry that the president’s moves threaten the Fed’s separation from politics.
Miran fills a vacancy on the Fed’s board after another governor, Adriana Kugler, resigned before her term expired. He is expected to serve out the remainder of her term, lasting just over four months. But Democratic lawmakers have raised strong concerns over his White House ties. Their main worries include Miran’s plan to take a leave of absence from the CEA rather than resign — a decision he attributed to his short tenure. Miran has, however, indicated willingness to step down if confirmed for a longer stint at the Fed. He holds a PhD in economics from Harvard University and served as a senior advisor in the Treasury Department during Trump’s first presidency. He later joined the Manhattan Institute, a conservative think tank, where he wrote commentaries on issues including calls for Fed reform.
Separately, Cook has been in a legal fight to stop her removal from the central bank after Trump sought to oust her over allegations of mortgage fraud. Trump had tried to appeal a federal judge’s decision to block her removal temporarily as her legal case played out, but this too was rejected Monday. In the appellate court’s 2-1 decision, judges Bradley Garcia and J. Michelle Childs noted Cook’s “strong likelihood of success” on at least her argument that she was not given proper notice or chances to respond before Trump moved to fire her. Judge Gregory Katsas, who dissented, said the importance of the Fed’s board “only heightens the government’s interest in ensuring that its Governors are competent and capable of projecting confidence into markets.” The eventual outcome of Cook’s legal case could have broader implications for the Fed.
For now, the central bank is widely expected to lower its benchmark lending rate by 25 basis points on Wednesday, to a range between 4.0 percent and 4.25 percent — as policymakers try to shore up the economy amid a weakening labor market. Trump on Monday reiterated his call for a rate cut, writing on his Truth Social platform that Fed Chair Jerome Powell “must cut interest rates, now, and bigger than he had in mind.” Investors will also closely monitor Powell’s remarks after the rate decision is unveiled Wednesday, for hints on the pace and size of further reductions to come.
© 2024 AFP
