White House economic adviser Stephen Miran is one of Donald Trump’s chief strategists for scaling back the Federal Reserve’s autonomy. The president is giving him a shot at disrupting the central bank from the inside.
The Harvard-trained economist, tapped by Trump for a Fed board seat, has proposed measures that would allow the president to fire Fed governors at will. He wants to end the inflation targeting that anchors expectations for prices and has slammed the “wildly inappropriate” purchases of Treasury debt during economic expansions. He has even questioned traditional notions of central bank independence.
The Senate Banking Committee is expected to hold a hearing on Miran’s nomination as soon as next week, and the White House is pressing GOP lawmakers to give him a confirmation vote in time for the Fed’s September meeting. If Miran joins the board, his extensive critiques of the central bank would make him a rare iconoclast within an institution that strives for consensus and stability. It would also be a significant step in Trump’s efforts to gain more control over the Fed in his bid to lower interest rates to boost the economy.
“Having followed the Federal Reserve closely for nearly 30 years, I cannot remember any time when a governor or reserve bank president was pushing to change the institution this much,” said Rebecca Patterson, a senior fellow at the Council on Foreign Relations and former chief investment strategist at the hedge fund Bridgewater Associates.
Trump says the president should have a say in setting interest rates, and his attempts to pressure Fed Chair Jerome Powell to lower borrowing costs — along with the unprecedented attempt to fire Gov. Lisa Cook — are widely viewed as an effort to exert political influence over the central bank. It’s a prospect that is making people inside and outside the Fed nervous.
“Miran would have little difficulty reflecting the president’s views,” said Karen Petrou, the managing partner of Federal Financial Analytics. The proposals he has crafted would create “a far more political central bank.”
Critics of Trump’s moves are concerned that a more political Fed would make interest rate decisions based on near-term considerations to aid the economy rather than in the long-term interest of price stability.
Miran, a former hedge fund investor, would fill a vacancy created by former Fed Gov. Adriana Kugler’s unexpected resignation just six months before the end of her term. But if Trump is successful in his attempt to dismiss Cook for cause, that could position Miran for a lengthier stint at the Fed. Trump on Tuesday appeared to suggest that Miran, the chair of his Council of Economic Advisers, could be in line to replace Cook, whose term won’t expire until 2038.
“We might switch him to the other—it’s a longer term,” the president said during a Cabinet meeting.
Sen. Elizabeth Warren (D-Mass.) has already pledged to grill Miran over “whether he’d serve the American people as an independent voice at the Fed or merely serve Donald Trump.” And after Trump announced his plans to fire Cook — the Fed governor has sued on the grounds that his actions were “unprecedented and illegal” — the progressive group Employ America began circulating opposition memos to lawmakers that spotlighted Miran’s views on both the dollar and Fed independence.
The White House and Miran declined to comment for this story.
Miran’s writings as a senior fellow at the Manhattan Institute, along with the analysis published in his capacity as a senior strategist at the investment firm Hudson Bay Capital, largely focused on the economic effects of fiscal and monetary policy. His work on Fed-related issues was extensive. He wrote frequently about rate decisions, often taking a hawkish stance — i.e., he wanted to keep interest rates elevated— even as post-pandemic inflation and financial conditions eased.
He’s also a noted skeptic of a strong dollar: A post-2024 election treatise on a possible “Mar-a-Lago Accord” that would convert Treasury debt into longer-duration bonds and weaken the greenback was widely cited as a potential blueprint for Trump’s agenda by Wall Street traders.
But for central bank watchers, his essay last year calling for changes that would give the president direct control over central bank policymakers was more eyebrow-raising. The recommendations included shortening the 14-year terms of governors — which central bank officials view as a safeguard against political interference — and putting state governors in charge of the boards of the 12 reserve banks that are spread throughout the country, which also have a say in setting interest rates.
With co-author Dan Katz — a fellow Manhattan Institute alum who’s now chief of staff at Treasury — Miran also proposed changes that would subject the Fed to the standard appropriations process, giving Congress control over its budget; make it easier to fire career staff and allow the leaders of reserve banks to vote in each meeting of the policy-setting Federal Open Market Committee. (Currently, the seven Fed governors and the leader of the New York Fed hold eight of the 12 seats on the FOMC, and the heads of the 11 remaining reserve seats alternate each year for the remaining four slots.)
Miran and Katz argued that their proposals — which would require Congress to pass major changes to the Federal Reserve Act — would also provide lawmakers with more leverage over the institution and empower state governments in a manner that “is likely proportional to the existing political balance.” Critically, giving each regional bank a vote on monetary policy would “check the ability of the U.S. president to completely dominate the balance of power on the FOMC.”
Recent, precedent-setting court decisions had stripped power from independent regulators, they noted, and their proposed changes are intended to “ensure that the Fed can operate with the necessary independence to set effective monetary policy while being accountable to democratic institutions.”
But as conservative economist and Hoover Institution fellow John Cochrane wrote in a recent blog post, “placing Fed officials under the thumb of the President would seem to mean more politics.”
Still, even some of Miran’s critics say his analysis has identified problems at the central bank that need to be rectified. There is broad consensus among conservatives that the Fed’s post-financial crisis purchases of debt securities to support the economy eroded the lines between fiscal and monetary policy — something Miran has spotlighted repeatedly. As for his proposal to nix the Fed’s 2 percent inflation target, there have been calls across the political spectrum of economists for the central bank to reconsider its inflation-fighting regime.
“There’s a lot that needs to be shaken up,” Petrou said. In that regard, “Miran is certainly the guy to do it.”
