Trump to place a supporter into Fed

Investment Analysis Clubs Macro Economic Trends and Risks
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Adriana Kugler, who served on the Board of Governors of the Federal Reserve System, officially stepped down on Friday after abruptly announcing last week that she would leave the post early and return to academia. If I was a conspiracy theorist I would wonder why she would quit just at the moment that President Trump craves another pressure point to influence Fed Chair Jerome Powell to cut the fed funds rate.

https://www.nytimes.com/2025/08/08/business/economy/fed-miran-rates-powell-trump.html

‘A Loyalist Inside the Building’: Trump’s Temporary Fed Pick Could Have a Lasting Effect

Stephen I. Miran may spend only a few months on the central bank’s board of governors, but in that time he can influence the discussions around interest rates and who will become the institution’s next leader.

By Colby Smith, The New York Times, Aug. 8, 2025

Stephen I. Miran may be filling only a temporary opening on the Federal Reserve’s powerful board of governors, but in that role he can influence important discussions in and around the central bank, which President Trump has repeatedly attacked as an obstacle to his economic agenda….

Mr. Trump wants the Fed to cut interest rates significantly, but the central bank has opted to keep them steady this year, anticipating that the Trump administration’s tariff and other economic policies would unleash higher inflation even as growth slows….

As a governor, Mr. Miran will be able to vote on decisions related to interest rates, bank regulation and other internal matters, giving him a perch from which he can push for certain policy changes….

The Fed’s policy decisions are made by the 12-person Federal Open Market Committee, which is comprised all seven governors and a rotating set of presidents from five of the regional reserve banks. Without a persuasive economic argument, Mr. Miran’s ability to influence the trajectory of interest rates will be limited….[end quote]

A full term for a Fed governor is 14 years. Jerome Powell’s term as governor will end in 2028 since he can stay on as governor even though his term as Chair will end next May.

The only chance that Trump had to slip in a new governor was for one of the existing governors to quit early…like Adriana Kugler did.

I can’t help wondering what kind of inducements were applied to her behind the scenes.

Wendy

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If you were a conspiracy theorist would you tell us or keep it a secret?

DB2

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Do Fed governors need Senate approval?

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Yes. The article says the approval could take months but still be done before the October meeting of the FOMC.

Wendy

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It’s worth noting that her term was to end in January 2026, so her exit is only a few months early. She may have gotten an offer that she liked and which was only open now, knowing that she was going to be out a few months from now anyway, or she may have tired of, and anticipated the bickering and politics that his sure to envelop the Fed meetings until the tiny tot gets his way.

There may be a smoking gun here, but there doesn’t have to be. It’s pretty easily explained by good old fashioned logic.

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Looks like all the qualification requirements relevant here have been met:

Miran, who criticized the Fed last fall for cutting rates, warning that lower rates could perpetuate inflation further, is now in favor of cutting rates.

Miran, who holds a PhD in economics from Harvard University, believes that the Trump administration’s policies, from immigration to trade and deregulation, which he has helped create, are disinflationary. This contrasts with many on the Fed who believe the president’s tariffs could lead to higher inflation.

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Challenged about a similar situation, Maynard Keynes replied, "“When the facts change, I change my mind. What do you do?”

The Captain

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So the fact change driving this mind change has been the switch to a supposedly disinflationary policy, or working for a new master?

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I have no idea. My point is simply that changing one’s mind is not automatically a negative. Since Chavez, I changed my mind about owning a home which was at least the second time I changed my mind about the subject. Circumstances matter.

I made a down payment on an apartment I thought suitable. When the building was almost finished I visited the apartment and the street noise was terrible. I used the missed target date to get my money back.

The Captain

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Agreed. There might be good reasons. Then again,

WASHINGTON, Aug 8 (Reuters) - Having railed against the “revolving door” between the executive branch and the U.S. Federal Reserve, Council of Economic Advisers Chair Stephen Miran may now be walking through it after President Donald Trump nominated him to the Board of Governors of an institution Miran would like to radically overhaul.

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The Dems could play the “lame duck card” that Mitch McConnell played to keep Obama from appointing Merrick Garland to the SCOTUS and filibuster the nominee.

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How would that work? Since Harry Reid nuked the two-thirds rule for nominees back in 2013 only a simple majority is needed. The Ds can filibuster, but that delay would be limited since the Rs control the Senate.

DB2

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My mistake. Thanks for the correction.

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Not two-thirds. 60%.

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You are correct.

DB2

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Doesn’t matter. How many times did #43 use “recess appointments” to put people in office whose nomination would have been DOA in Congress?

Steve

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