It did not take long for President Donald Trump to find a replacement for Adriana Kugler at the Federal Reserve. After several days of contemplation, the White House chose Stephen Miran, the chair of the Council of Economic Advisers, to fill a seat on the Federal Reserve Board. With Trump appointing another ally to the Eccles Building, does this signal an imminent interest rate cut?
Stephen Miran Goes to the Fed
During that chaotic August 1, when President Trump fired Bureau of Labor Statistics Commissioner Erika McEntarfer, Fed Governor Adriana Kugler announced her resignation. Kugler didn’t have long left in her position, as she had temporarily replaced Lael Brainard, who had left the US central bank to serve in the Biden administration.
Kugler, who was absent during the July Federal Open Market Committee (FOMC) policy meeting, did not provide an exact reason for stepping down. The Fed governor, a data-dependent monetary policymaker, only noted that she plans to return to Georgetown University to teach.
In an August 7 Truth Social post, the president announced he is nominating Stephen Miran to serve out the remainder of Kugler's term, which expires January 31, 2026. In the meantime, Trump wrote, the administration will pursue a permanent replacement.
“Stephen has a Ph.D. in Economics from Harvard University, and served with distinction in my First Administration,” President Trump said on his social media platform. “He has been with me from the beginning of my Second Term, and his expertise in the World of Economics is unparalleled — He will do an outstanding job. Congratulations Stephen!”
His nomination will now head to the Senate, and it will likely be a raucous affair, primarily because he agrees with the president that the Federal Reserve should be lowering interest rates. Miran has also joined his colleagues at 1600 Pennsylvania Avenue in criticizing Fed Chair Jerome Powell.
"What we're seeing now in real time is a repetition once again of this pattern where the president will end up having been proven right," Miran said on MSNBC. "And the Fed will, with a lag and probably quite too late, eventually catch up to the president's view."
Miran has been one of many administration officials proclaiming that tariffs do not cause inflation. The Council of Economic Advisers recently published a paper highlighting the lack of price pressures amid the implementation of the president’s sweeping global tariffs. Despite the Fed fearing tariff-driven inflation, Miran does not support the institution’s consternation, telling Bloomberg Television hours before his nomination that too many at the Eccles Building suffer from “tariff derangement syndrome.”
Waller in Washington
Reports have circulated that the Trump team is bullish on Fed Governor Christopher Waller as the next head of the US central bank. Betting website Polymarket now has Waller as the chief contender to become Jerome Powell’s substitute when his term expires in May 2026. Miran showered Waller with praise during his appearance on Bloomberg Television.
“Governor Waller has built up an impressive track record the past few years at the Fed with his predictions about inflation and where Fed policy needed to move to respond to that inflation," Miran said, adding that he did not succumb to tariff fears like many of his monetary colleagues had.
Waller, a Trump appointee, has stated in the past that he would accept the position of Fed chairman if the president offered him the job. Should he be chosen for the role, it would make sense, based on his recent actions and comments. Waller was one of two dissenting votes – Fed Vice Chair Michelle Bowman was the other – and preferred to lower interest rates by a quarter point.
In prepared speeches and media interviews leading up to and after the July FOMC meeting, Waller argued that if the Federal Reserve System is concerned about the lag effect of monetary policy, then officials need to act promptly to prevent further deterioration of the US labor market. He fears that, while the headline numbers indicate solid employment conditions, a flurry of factors, such as downward revisions, should be a cause for concern.
"My final reason to favor a cut now is that while the labor market looks fine on the surface, once we account for expected data revisions, private-sector payroll growth is near stall speed, and other data suggest that the downside risks to the labor market have increased. With underlying inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate."
Regime Change
Treasury Secretary Scott Bessent recently proposed a complete review and overhaul of the Federal Reserve System. Does a regime change start with Stephen Miran? This could mark the beginning of transforming the US central bank into a modern institution that no longer relies on outdated economic models and slow data-gathering entities (hello, Bureau of Labor Statistics!) to conduct monetary policy. While abolition is the best outcome, renovating the century-old organization that causes the booms and busts, recessions and depressions, and inflation might be the second-best option for now.
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