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## An Unforeseen Appointment: Trump’s Influence Over the Fed

In an unexpected turn of events, President Donald Trump has decided to appoint a new member to the Federal Reserve’s board of governors. This move allows him a rare opportunity to exert influence over one of the few independent federal agencies left.

## Stephen Miran Steps In

Trump has nominated Stephen Miran, chair of the White House’s Council of Economic Advisers. Miran is set to temporarily fill a vacancy left by Governor Adriana Kugler, a Biden appointee, who will step down on Friday. Once approved by the Senate, Miran will serve until January 31, 2026.

## Criticisms and Political Interests

Trump’s decision has not come without its share of controversy. He has been a relentless critic of the current Fed chair, Jerome Powell, especially for keeping short-term interest rates unchanged. Just last week, he took to social media to denounce Powell as “a stubborn MORON.” This appointment, therefore, raises concerns over potential political meddling in the traditionally independent institution.

## Miran’s Economic Views

Miran is a fervent supporter of Trump’s economic strategies, particularly his income tax cuts and tariff hikes. He argues this approach will bolster economic growth and ultimately reduce budget deficits. Furthermore, he is dismissive of fears that these tariffs will cause heightened inflation, a view not shared by Powell.

### Potential Impact on Interest Rates

Miran’s presence on the board could mean a vote in favour of reducing interest rates, aligning with Trump’s desire to lessen federal borrowing costs. Lower rates could also invigorate the stagnant housing market, slowed by rising mortgage costs. However, it’s important to note that the Fed doesn’t directly set the longer-term interest rates influencing homes and cars.

### Constructive Dissent

At the Fed’s recent meeting, key interest rates were maintained at 4.3%. Yet dissent exists among board members, particularly Christopher Waller and Michelle Bowman, both Trump appointees, who disagreed with this decision. Miran could soon join their ranks, providing further support for Trump’s economic agenda.

## Potential Long-term Changes

With Powell’s term as chair expiring in May 2026, there’s potential for significant shifts within the Fed’s leadership. Candidates like Kevin Warsh and Kevin Hassett are speculated to be in the running. Alternatively, Christopher Waller might be selected as Powell’s successor, should the opportunity arise.

## Miran’s Monetary Proposals

Miran has been known to express some unconventional economic theories. He even proposed measures to devalue the dollar last November, aiming to boost exports and lessen imports — key concerns for Trump. Moreover, he suggested a “Mar-a-Lago Accord” akin to the 1980s Plaza Accord, to improve trade terms with partners such as the European Union and Japan.

## Rethinking the Fed’s Structure

In March 2024, as a fellow at the Manhattan Institute, Miran proposed overhauling the Fed’s governance. This would include making it easier for a president to dismiss board members. Such changes, he argued, would prevent groupthink and correct monetary policy errors.

Trump’s strategic appointment of Miran reflects a calculated move to influence the Federal Reserve’s direction, with implications that may resonate well into the future.