Author: The Wall Street Journal
U.S. President Trump nominated his chief economic advisor Stephen Miran to the Federal Reserve Board, officially taking the first step in reshaping the Federal Reserve.
On Thursday local time, Trump announced via his social media platform that he would nominate Stephen Miran, chairman of the White House Council of Economic Advisers, to fill the Federal Reserve Board position vacated by Adriana Kugler's early resignation.
Trump praised Miran's expertise in economics as 'unmatched' and stated that he has been 'with me since the beginning of my second term.' Kugler's term was originally set to end in January 2026.
Miran has written an influential paper on the 'Mar-a-Lago Accord,' advocating for the U.S. to lower the long-term value of the dollar. Furthermore, he has publicly questioned the Federal Reserve's independence and supports significant reforms to the Fed, including allowing all Federal Reserve officials to vote at every meeting and granting the White House the authority to dismiss central bank officials at any time.
This nomination is seen as Trump's first substantive move to reshape the leadership of the Federal Reserve in his second term. Analysts believe that Miran's joining will provide a strong supporter for Trump's calls for interest rate cuts and financial deregulation within the FOMC, undermining the authority of current Chairman Powell and accelerating the 'MAGA-ization' of the Federal Reserve.
However, Miran's appointment is only temporary. Trump has indicated that he plans to nominate a second candidate for governor in January, with a 14-year term, who is expected to succeed current Federal Reserve Chairman Powell.
There is division in the market over whether Miran can participate in the September Federal Open Market Committee meeting. Some analysts believe that due to the Senate confirmation process typically taking 4-8 weeks, combined with the Senate's August recess, the new governor is unlikely to take office in time to participate in the September meeting. However, some investors argue this could be a recess appointment that does not require Senate confirmation.
1. Proposer of the 'Mar-a-Lago Accord,' has repeatedly questioned the Federal Reserve
Stephen Miran is an economist who graduated from Harvard University. Before becoming the CEA chair in Trump’s second administration, he served as a senior advisor at the Treasury during Trump's first term. He is best known for his policy proposals stemming from an influential paper he published in November 2024.
In the paper, Miran envisioned a trade and currency agreement he called the 'Mar-a-Lago Accord,' which centered on advocating for the U.S. to take measures to depress the long-term value of the dollar. Although Miran later stated that the paper does not represent government policy, it has become a distinctive label for his personal policy inclinations.
More notably is his public questioning of the Federal Reserve's independence. In an article titled 'The Federal Reserve Is Not as Independent as It Seems' written for Barron's in 2024, Miran explicitly stated, 'The wall between fiscal and monetary policy has partially broken down, and the independence of the central bank has been exaggerated.' He believes the Federal Reserve has never truly been isolated from other government departments, especially the Treasury.
This view is consistent with his recent statements on social media, where he defended Trump's pressure on the Federal Reserve to lower interest rates, stating that the president has a 'remarkable record in both dovish and hawkish directions' on interest rate issues.
Miran also believes that the Federal Reserve adopted too flexible an inflation target in 2022, ultimately damaging its own credibility and leaving it on 'thin ice.' He warned that if the central bank fails to properly fulfill its responsibilities, it 'will face the risk of Congress revising the Federal Reserve Act or future presidents using this as a reason to remove governors.'
In 2023, when high interest rates led to the sudden collapse of Silicon Valley Bank, Miran criticized the Federal Reserve again. He pointed out that the Fed's policy 'has created an expectation in the market that regardless of how high inflation is, as long as the economy faces downward shocks, it will adopt aggressive easing policies.'
2. Previously advocated comprehensive reform of the Federal Reserve
Before joining this administration, Miran co-authored a far-reaching report for the Manhattan Institute in 2023 with his co-author Daniel Katz (currently Chief of Staff to Treasury Secretary Scott Bessent), proposing a series of radical reform proposals targeting the Federal Reserve.
The report criticizes the notion that officials with political appointment experience can make unbiased decisions as a 'disguise.' They argue that 'pretending a person can easily switch between highly politicized and so-called non-political roles without allowing political bias to influence policy is, at best, naive and, at worst, insidious.'
The report proposed a blueprint for structural reforms that includes:
All Federal Reserve officials—including all regional Fed presidents—should have voting rights at every FOMC meeting.
State governors should gain control over local oversight committees that select regional Fed presidents.
All senior Federal Reserve officials—including governors and regional Fed presidents—should be subject to dismissal by the White House at any time.
Prohibit board members from taking positions in the executive branch within four years after their term ends.
The Federal Reserve's operating budget should be funded by Congress and not remain independent as it does now.
3. Mixed reactions on Wall Street, focusing on the September interest rate meeting
Reactions on Wall Street to Miran's nomination are clearly divided. Some investors believe he will be beneficial to the market, while others express concerns about his qualifications and political stance.
Tom Di Galoma, managing director at Mischler Financial, believes Miran's joining is a 'good thing' for the Federal Reserve as he 'may lean towards lowering interest rates.' John Velis, an Americas macro strategist at BNY Mellon, also believes that Miran is likely to be a 'reliable dove.'
However, Andrew Brenner, head of international fixed income at NatAlliance Securities, bluntly stated that Miran is 'highly controversial' and questioned whether he could pass Senate confirmation, citing that he 'lacks market experience, lacks business experience, and is always involved in politics.'
There are mixed opinions in the market about whether Miran can attend the September FOMC meeting.
(Barron's) pointed out that the nomination requires Senate confirmation, a process that could take 4 to 8 weeks, making it 'unlikely' that he will be in place in time. However, Velis from BNY Mellon believes this could be a 'recess appointment' and therefore does not require Senate confirmation.
Nevertheless, most analysts, such as Ryan Sweet from Oxford Economics and Marc Chandler from Bannockburn Global Forex, stated that this nomination would not change their expectations of an imminent interest rate cut by the Federal Reserve.
4. The start of the 'MAGA-ization' of the Federal Reserve?
If confirmed, Miran will take over the remainder of Kugler's term until the end of January next year. This means he may only have a few opportunities to vote at interest rate decision meetings. Given the signs of economic cooling, the possibility of the Fed lowering interest rates in September is already high, so Miran's joining may have limited direct impact on the short-term interest rate path.
Although the term may be short, Trump's nomination of Miran is seen as the start of his long-term plan to reshape the Federal Reserve.
Unlike some nominees from Trump's first term, Miran is seen as a representative who is 'fully committed to the MAGA cause.' During his time in the White House, he published analysis reports insisting that despite tariffs, prices of imported goods were still declining, experiences that prepared him for future debates within the FOMC.
At the July interest rate meeting, two Trump-appointed governors voted against the immediate rate cut. Miran's joining will strengthen this 'dovish coalition' and accelerate the end of the Federal Reserve's tradition of striving to communicate with 'one voice' for decades.
Media commentary points out that Miran's joining the Federal Reserve carries significant symbolic meaning, bringing a firm 'MAGA perspective' into the Federal Open Market Committee, which is also interpreted as Trump's systematic infusion of his economic ideas into the U.S. central bank, indicating a profound change in the way the Fed operates and its policy discourse.