Core Summary

  • Stephen Miran, chairman of the Council of Economic Advisers, faced sharp criticism at a Senate hearing on Thursday amid concerns that, if confirmed as a Federal Reserve governor, he might follow President Donald Trump's wishes and undermine the Fed's independence.
  • Miran told the Senate Banking Committee that he would take leave from the White House to serve four months at the central bank. This prompted Democratic senators to question whether he would dare to defy Trump's preferences on monetary policy for fear of jeopardizing his prospects of returning to the Trump administration.
  • Miran repeatedly pushed back against suggestions that his policy votes would be politically tainted. Speaking about the Fed, he said: "Monetary policy independence is a key element of its success. I intend to uphold that independence."

In-Depth Analysis

Trump has said repeatedly in recent months that the current federal funds rate—now in the 4.25% to 4.5% range—is dampening economic growth and keeping the cost of servicing federal debt high.

The president has repeatedly called on Fed Chair Jerome Powell to cut interest rates. Trump has also called Powell incompetent and "too late" in adjusting monetary policy, one of the harshest verbal attacks by a U.S. president on a central bank chief.

In recent weeks, Trump has also demanded the resignation of Fed Governor Lisa Cook, accusing her of making false statements in two mortgage applications. Cook has refused to resign and filed a lawsuit to prevent her removal.

A rare sign of disagreement has emerged among policymakers: two Trump-appointed Fed governors voted against the central bank's decision to hold the federal funds rate steady in July, saying that lowering borrowing costs is crucial to supporting a weakening labor market. This marks the first time since 1993 that two Fed governors have simultaneously cast dissenting votes.

Powell and other policymakers have said that before cutting the key interest rate, they want to ensure that the Trump administration's tariffs do not fuel inflation. Inflation is currently nearly a full percentage point above the central bank's 2% long-term target.

If confirmed by the Senate, Miran would serve out the remainder of the term until January, after which, as he stated on Thursday, he would return to his current position as the White House's top economic adviser.

Neither Republican nor Democratic senators questioned Miran about the current level of the benchmark interest rate, instead focusing on his commitment to Fed independence.

Democratic Senator Andy Kim of New Jersey told Miran: "During your tenure at the Fed, 'you would likely continue to act in ways consistent with the president's political interests, because you know he will again be your future boss at the White House.'"

Democratic Senator Elizabeth Warren of Massachusetts said she expects Miran to become Trump's "puppet."

Warren told Miran: "You have made clear that you will do or say whatever Donald Trump wants you to do or say. That might work in a political position, but it would sever the Fed's independence and significantly raise the cost of living for American families."

Some Republican lawmakers, while not criticizing Trump's efforts to influence the Fed, also expressed support for the central bank being free from political interference.

Republican Senator John Kennedy of Louisiana asked Miran: "Are you Donald Trump's puppet?"

Miran replied: "Absolutely not. I think very independently, as can be seen from my willingness to deviate from consensus and hold non-consensus views. I believe that, if confirmed, I will continue to think independently."

Kennedy responded: "We will hold you to that—Governor, future Governor. You must judge honestly and say what you see."