Why Trump's Fed pick is raising alarm over central bank's independence
US President Donald Trump's nomination of his top economic adviser to the Federal Reserve Board could strengthen the White House's influence over the central bank and deepen concerns over its independence, analysts said.
Stephen Miran, chairman of the Trump administration's Council of Economic Advisers and an architect of its tariff policy, will be nominated to temporarily fill a vacant seat on the Federal Reserve's board of governors, the US president announced Thursday on social media.
Analysts warned the move could put further pressure on Fed chairman Jerome Powell and increase the chances of an interest rate cut in September – a shift pushed by Trump that could impact global markets.The nomination, now subject to Senate approval, came amid an ongoing tug-of-war between Trump and Powell over interest rates. Miran has previously proposed sweeping reforms to the central bank.
'He [Miran] could be a shadow over Powell,' said Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at French investment bank Natixis, referring to the Trump administration official's previous criticism of Powell over the Fed's decision to maintain interest rates.
'He's not only aiming to be nominated. He's aiming to change the charter of the Fed. So that's why this is a big issue,' she said.
Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, agreed that Miran's nomination would likely 'raise the White House's influence on the Fed' and increase the chances of a September rate cut.
Miran is widely expected to join Trump-appointed governors Christopher Waller and Michelle Bowman in supporting the president's push for lower borrowing costs, after they opposed the Fed's decision in July to hold rates steady.
If confirmed, he would fill the seat recently vacated by Adriana Kugler, a former appointee of former US President Joe Biden, who announced her resignation last week. The term for the seat runs through January 31, 2026.Powell, whose term ends on May 15, 2026, has repeatedly resisted calls to step down amid pressure from Trump. When asked about his job security in April, he said: 'I fully intend to serve all of my term.' Earlier this week, Trump said he had a shortlist of four candidates to potentially replace Powell, including economic adviser Kevin Hassett and former Fed governor Kevin Warsh.
Garcia-Herrero, at Natixis, highlighted a report co-authored by Miran last year in which he proposed overhauls to the Fed, including reducing governors' 14-year terms to eight years and granting the president the authority to remove them.
Miran is best known for a paper published in November 2024 in which he called for a 'Mar-a-Lago Accord' – a strategy to gradually weaken the US dollar by pressuring major economies such as China, Japan and the European Union to sell US dollar assets and swap short-term US Treasuries for 100-year bonds.
In the widely circulated paper, he blamed America's huge trade deficit on the overvaluation of the US dollar stemming from its status as the global reserve currency.Trump's trade war against China and other major economies, launched in April, appears to align with Miran's hardline strategy.
By early afternoon on Friday, the US dollar index had dipped below 98 before slightly rebounding to about 98.2, while the spot gold price stood at US$3,392 per ounce after a volatile morning session.
The yuan weakened to about 7.185 per US dollar, while the yen, after slight fluctuations, stood at 147.36 per US dollar.
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3 hours ago
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