DONALD Trump’s pick to join the Federal Reserve’s board of governors said on Thursday that he plans to take a leave of absence from his White House job while at the US central bank – but vowed to uphold its independence.
Stephen Miran, who chairs the White House Council of Economic Advisers (CEA), said the reason for this unusual arrangement is because he is filling a short-term vacancy.
“I have received advice from counsel that what is required is an unpaid leave of absence” from the CEA, Miran told the Senate Banking Committee at his confirmation hearing.
“Considering the term for which I’m being nominated is a little bit more than four months, that is what I will be taking.”
When pressed, he added: “If I am nominated and confirmed for a longer term than just a handful of months, I would absolutely resign.”
Trump had nominated Miran to the Fed’s board to finish out the term of Adriana Kugler, an appointee of former president Joe Biden who recently stepped down.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
But Miran’s hearing comes as the bank faces growing pressure from Trump to slash interest rates, and Miran fielded pointed questions on his independence.
The speed at which Miran is appointed will be important, given that he could take up the Fed role by the time the bank’s rate-setting Federal Open Market Committee (FOMC) holds its next meeting from Sep 16-17.
Critics accuse Trump of seeking to tip the Fed’s board in favour of lowering interest rates.
“How can Miran be independent while he is still employed directly as the president’s chief economist?” warned Aaron Klein, a senior fellow at the Brookings Institution.
Fed independence ‘critical’
Miran sought to reassure lawmakers on Thursday, saying that the FOMC “is an independent group with a monumental task, and I intend to preserve that independence.”
He added that the most important job of the central bank is to prevent depressions and hyperinflation.
“Independence of monetary policy is a critical element for its success,” he said.
Trump has blamed current interest rates for the sluggish housing market, citing benign inflation data too in calling for cuts – which tend to boost the economy.
But Fed policymakers are wary that slashing rates too quickly could risk higher inflation, and are monitoring the effects of tariffs on prices.
Senator Elizabeth Warren, the top Democrat on the banking committee, charged Thursday that Trump has launched an “all-out assault” on the Fed’s independence. She challenged Miran to prove his independence from Trump.
Minnesota Senator Tina Smith argued that the president “wants loyalists on the Fed board.”
Oxford Economics chief US economist Ryan Sweet told AFP this could be a “long tryout” for Trump to decide if he will nominate Miran again once the temporary term ends in January.
“One person isn’t necessarily going to move the needle too much” when it comes to policy or independence, Sweet said.
‘Pandora’s box’
The seven members of the Fed’s powerful board of governors sit on the central bank’s 12-member FOMC, voting on interest rate decisions.
The personnel shift came, however, as the Fed faced intensifying calls from the president to cut rates significantly. Trump has repeatedly lashed out at Fed Chair Jerome Powell for not doing so.
The president also moved to fire another Fed governor, Lisa Cook, citing allegations of mortgage fraud.
Cook, the first Black woman to serve on the Fed’s board, is fighting to stay in her role. The Wall Street Journal reported on Thursday that the Justice Department has opened a criminal investigation into her.
“If Trump is able to fire her, and courts uphold it, that opens Pandora’s box,” Sweet said. “That’s when I think markets will start to react, (to the idea that) the Fed is potentially going to get politicised.” AFP
