WASHINGTON: The US Federal Reserve started a key interest rate meeting Tuesday, hours after Donald Trump’s new appointee narrowly won confirmation to join the central bank – while another top official fights her removal by the president.
Stephen Miran, who has been a key advisor to Trump, took the oath of office as a Fed governor on Tuesday, the Fed said in a statement, as its rate-setting Federal Open Market Committee (FOMC) began a two-day policy gathering.
Miran narrowly won a Senate vote on Monday night, making him one of the FOMC’s 12 voting members.
There is little doubt that the Fed will make its first interest rate cut of 2025 at the end of its latest meeting as policymakers pivot towards shoring up a deteriorating jobs market.
Fed poised for first rate cut of 2025
But concerns about political influence over the independent central bank will loom over the gathering, particularly because Trump has ramped up pressure on Fed Chair Jerome Powell to slash rates.
Miran’s appointment as a Fed governor only gives him one vote on the FOMC, however, and it remains to be seen if he will push for larger rate cuts as the president has repeatedly demanded.
On Tuesday, Trump told reporters that the Fed should “listen to smart people like me.”
Prior to joining the Fed, Miran was serving as chairman of the White House Council of Economic Advisers.
But he has come under fire from Democratic lawmakers over his stated plans to take a leave of absence from his White House role – rather than resign – as he is serving out a term at the Fed lasting just over four months.
This is because Miran is replacing another Fed governor, Adriana Kugler, who stepped down before her stint was due to end in late January.
Miran’s swearing-in also comes as Trump seeks to oust Fed Governor Lisa Cook over allegations of mortgage fraud.
So far, Cook, who was appointed by former president Joe Biden, has managed to remain in place for the FOMC’s meeting.
Trump announced in August that he was removing Cook over allegations of mortgage fraud, and she has been in a legal battle with the president since – a fight that could have broader implications for the Fed moving forward.
While a federal appeals court ruled late Monday that she could remain in position while her legal challenge proceeds, the Trump administration is set to take the case to the Supreme Court.
“The administration will appeal this decision and looks forward to ultimate victory on the issue,” White House spokesman Kush Desai told AFP.
He said that the president “lawfully removed Lisa Cook for cause,” which could be interpreted to mean malfeasance or dereliction of duty.
Although Trump had pointed to a criminal referral in announcing Cook’s removal, she has not been charged with a crime and the alleged incidents took place before she was a Fed governor.
Since its last cut in December, the Fed has held the benchmark lending rate at a range between 4.25 percent and 4.50 percent as policymakers monitor the effects of Trump’s tariffs on the economy.
But markets widely expect a 25 basis points cut at the end of discussions on Wednesday. Investors will also be watching for signals on the number and pace of future rate reductions.
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